Reform and inequality during the transition: An analysis using panel household survey data, 1990-2005
Using for the first time survey data from 26 post-Communist countries, covering the period 1990-2005, the paper examines correlates of unprecedented increases in inequality registered by most of these economies. We find that, after controlling for country-fixed effects and type of survey used, economic reform (measured by the EBRD index) is strongly negatively associated with bottom deciles’ income shares and positively with income shares of the top two deciles. However, once economic reform is broken into its different component parts, the picture is more nuanced: large-scale privatization and infrastructure reform (mostly consisting of privatization and higher fees) are responsible for this pro-inequality effect while small-scale privatization tends to raise income shares of the bottom deciles. Acceleration in growth is also pro-rich. On the other hand, democratization (measured by the Polity measure) is strongly pro-poor, as is lower inflation. Somewhat surprisingly, we find no evidence that higher government spending as share of GDI reduces inequality.
|Date of creation:||05 Mar 2008|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Mitra, Pradeep & Yemtsov, Ruslan, 2006. "Increasing inequality in transition economies : is there more to come?," Policy Research Working Paper Series 4007, The World Bank.
- 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.
- Dani Rodrik, 1999. "Democracies Pay Higher Wages," The Quarterly Journal of Economics, Oxford University Press, vol. 114(3), pages 707-738.
- By Ales BulÌr, 2001. "Income Inequality: Does Inflation Matter?," IMF Staff Papers, Palgrave Macmillan, vol. 48(1), pages 1-5.
- Sukiassyan, Grigor, 2007. "Inequality and growth: What does the transition economy data say?," Journal of Comparative Economics, Elsevier, vol. 35(1), pages 35-56, March.
- 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.
- Eswar S Prasad & Michael P. Keane, 2000. "Inequality, Transfers and Growth; New Evidence From the Economic Transition in Poland," IMF Working Papers 00/117, International Monetary Fund.
- Keane, Michael P. & Prasad, Eswar, 2002. "Inequality, Transfers and Growth: New Evidence from the Economic Transition in Poland," IZA Discussion Papers 448, Institute for the Study of Labor (IZA).
- Keane, M. P. & Prasad, E. S., 2000. "Inequality, Transfers and Growth: New Evidence from the Economic Transition in Poland," Working Papers 00-09, C.V. Starr Center for Applied Economics, New York University.
- Milanovic, Branko, 2007.
"Where in the world are you? Assessing the importance of circumstance and effort in a world of different mean country incomes and (almost) no migration,"
3420, University Library of Munich, Germany.
- Milanovic, Branko, 2008. "Where in the world are you ? Assessing the importance of circumstance and effort in a world of different mean country incomes and (almost) no migration," Policy Research Working Paper Series 4493, The World Bank.
- Li, Hongyi & Squire, Lyn & Zou, Heng-fu, 1998.
"Explaining International and Intertemporal Variations in Income Inequality,"
Royal Economic Society, vol. 108(446), pages 26-43, January.
- Hongyi Li & Lyn Squire & Heng-fu Zou, 1998. "Explaining International and Intertemporal Variations in Income Inequality," CEMA Working Papers 73, China Economics and Management Academy, Central University of Finance and Economics.
- Francisco H. G. Ferreira, 1999. "Economic transition and the distributions of income and wealth," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 7(2), pages 377-410, July.
- Ferreira, Francisco H. G., 1997. "Economic transition and the distributions of income and wealth," Policy Research Working Paper Series 1808, The World Bank.
- Michele Giammatteo, 2006. "Inequality in Transition Countries: The Contributions of Markets and Government Taxes and Transfers," LIS Working papers 443, LIS Cross-National Data Center in Luxembourg.
- José Gabriel Palma, 2006. "Globalizing Inequality: ‘Centrifugal’ and ‘Centripetal’ Forces at Work," Working Papers 35, United Nations, Department of Economics and Social Affairs.
- Jens Hölscher, 2006. "Income Distribution and Convergence in the Transition Process – A Cross-Country Comparison," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 48(2), pages 302-325, June. Full references (including those not matched with items on IDEAS)