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A Political Economy Perspective on Redistribution and Growth in Transition

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  • Keane, Michael
  • Prasad, Eswar

Abstract

Poland undertook a rapid and decisive set of political and economic reforms starting in 1989-90, a period that has become known as the big bang. A widely held view is that, in all of the transition economies, the economic upheaval associated with the process of transition has led to substantial increases in inequality, thereby complicating the process of reform. In this paper, we use micro data from the Polish Household Budget Surveys (HBS) to show that the increase in overall income inequality in Poland during the transition was actually quite modest. Our analysis indicates that social transfers played an important role in attenuating the rise in overall income inequality and, by extension, in maintaining the social and political cohesion that was essential for the reform process.

Suggested Citation

  • Keane, Michael & Prasad, Eswar, 2001. "A Political Economy Perspective on Redistribution and Growth in Transition," MPRA Paper 54289, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:54289
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    File URL: https://mpra.ub.uni-muenchen.de/54289/1/MPRA_paper_54289.pdf
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    References listed on IDEAS

    as
    1. Branko Milanovic, 1999. "Explaining the increase in inequality during transition," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 7(2), pages 299-341, July.
    2. Okrasa, Wlodzimierz, 1999. "Who avoids and who escapes from poverty during transition? - evidence from Polish panel data, 1993-96," Policy Research Working Paper Series 2218, The World Bank.
    3. Alberto Alesina & Dani Rodrik, 1994. "Distributive Politics and Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 109(2), pages 465-490.
    4. Banerjee, Abhijit V & Newman, Andrew F, 1993. "Occupational Choice and the Process of Development," Journal of Political Economy, University of Chicago Press, vol. 101(2), pages 274-298, April.
    5. Michael P. Keane & Eswar S. Prasad, 2002. "Inequality, Transfers, And Growth: New Evidence From The Economic Transition In Poland," The Review of Economics and Statistics, MIT Press, vol. 84(2), pages 324-341, May.
    6. Fidrmuc, Jan, 2000. "Political support for reforms: Economics of voting in transition countries," European Economic Review, Elsevier, vol. 44(8), pages 1491-1513, August.
    7. Gillian Paull, 1991. "Poverty Alleviation and Social Safety Net Schemes for Economies in Transition," IMF Working Papers 91/14, International Monetary Fund.
    8. Persson, Torsten & Tabellini, Guido, 1994. "Is Inequality Harmful for Growth?," American Economic Review, American Economic Association, vol. 84(3), pages 600-621, June.
    9. Perotti, Roberto, 1996. "Growth, Income Distribution, and Democracy: What the Data Say," Journal of Economic Growth, Springer, vol. 1(2), pages 149-187, June.
    10. Svejnar, Jan, 1996. "Enterprises and Workers in the Transition: Econometric Evidence," American Economic Review, American Economic Association, vol. 86(2), pages 123-127, May.
    11. Michael P. Keane & Eswar S. Prasad, 2002. "Inequality, Transfers, And Growth: New Evidence From The Economic Transition In Poland," The Review of Economics and Statistics, MIT Press, vol. 84(2), pages 324-341, May.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    economics of transition; inequality; growth; Poland;

    JEL classification:

    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • P2 - Economic Systems - - Socialist Systems and Transition Economies
    • P26 - Economic Systems - - Socialist Systems and Transition Economies - - - Political Economy
    • P3 - Economic Systems - - Socialist Institutions and Their Transitions

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