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Consumption and Income Inequality During the Transition to a Market Economy: Poland, 1985–1992

Author

Listed:
  • Keane, Michael
  • Prasad, Eswar

Abstract

This paper challenges the conventional wisdom that income and consumption inequality in Poland increased substantially following the economic transition in 1989–90. Using microdata from the 1985–92 Household Budget Surveys, we find that overall income inequality increased in 1989 but subsequently declined to pretransition levels. The distribution of consumption reveals a similar pattern. Social transfers are shown to have played an important role in mitigating increases in overall income inequality during the transition. However, the relative well-being of different socioeconomic groups was altered and, despite the reasonably good targeting of transfers, there were clear winners and losers in the transition process.

Suggested Citation

  • Keane, Michael & Prasad, Eswar, 2001. "Consumption and Income Inequality During the Transition to a Market Economy: Poland, 1985–1992," MPRA Paper 54356, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:54356
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    File URL: https://mpra.ub.uni-muenchen.de/54356/9/MPRA_paper_54356.pdf
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    References listed on IDEAS

    as
    1. Szulc, Adam, 1995. "Measurement of Poverty: Poland in the 1980s," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 41(2), pages 191-205, June.
    2. Olivier Blanchard & Kenneth Froot & Jeffrey Sachs, 1994. "The Transition in Eastern Europe, Volume 2: Restructuring," NBER Books, National Bureau of Economic Research, Inc, number blan94-3, December.
    3. Shorrocks, Anthony F, 1984. "Inequality Decomposition by Population Subgroups," Econometrica, Econometric Society, vol. 52(6), pages 1369-1385, November.
    4. Olivier Jean Blanchard & Kenneth A. Froot & Jeffrey D. Sachs, 1994. "The Transition in Eastern Europe, Volume 1," NBER Books, National Bureau of Economic Research, Inc, number blan94-2, December.
    5. Olivier Jean Blanchard & Kenneth A. Froot & Jeffrey D. Sachs, 1994. "Introduction to "The Transition in Eastern Europe, Volume 1"," NBER Chapters,in: The Transition in Eastern Europe, Volume 1, pages 1-18 National Bureau of Economic Research, Inc.
    6. Brunon Gorecki, 1994. "Evidence of a New Shape of Income Distribution in Poland," Eastern European Economics, Taylor & Francis Journals, vol. 32(3), pages 32-51, June.
    7. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
    8. McClements, L. D., 1977. "Equivalence scales for children," Journal of Public Economics, Elsevier, vol. 8(2), pages 191-210, October.
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    Cited by:

    1. Wan, Guanghua, 2002. "Income Inequality and Growth in Transition Economies: Are Nonlinear Models Needed?," WIDER Working Paper Series 104, World Institute for Development Economic Research (UNU-WIDER).

    More about this item

    Keywords

    Transition Economies; Poland; Inequality; Social Transfers; Income Distribution;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • P2 - Economic Systems - - Socialist Systems and Transition Economies

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