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Inequality Reduction in Mongolia: A Dynamic Income Source Analysis

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  • Zagdbazar, Manlaibaatar

Abstract

Between 2007 and 2022, Mongolia’s Gini coefficient decreased by 26 percent. Structural economic shifts, labor market changes, and evolving income composition drive this reduction. Using dynamic income source decomposition on household survey data, this study finds that reduced shares and concentration of imputed housing consumption and self-employment income were the main equalizing forces. In contrast, rising wage shares exerted upward pressure on inequality despite declining wage concentration. The expansion of employment in the mining, trade, and finance sectors, along with broad coverage of social welfare programs, especially child benefits, played a significant role. Pandemic-era transfers amplified the effect of the social transfers. However, gender wage gaps, regional disparities, and vulnerability of herder households persist. The results underscore the importance of targeted labor market policies, improved social transfer design, and resilience measures for rural livelihoods in resource-dependent developing economies.

Suggested Citation

  • Zagdbazar, Manlaibaatar, 2025. "Inequality Reduction in Mongolia: A Dynamic Income Source Analysis," MPRA Paper 125762, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:125762
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    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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