IDEAS home Printed from https://ideas.repec.org/p/war/wpaper/2017-28.html
   My bibliography  Save this paper

Income inequality and the Great Recession in Central and Eastern Europe

Author

Listed:
  • Michal Brzezinski

    (Faculty of Economic Sciences, University of Warsaw)

Abstract

This paper uses the European Union Statistics on Income and Living Conditions (EU-SILC) data to study the changes in income inequality in Central and Eastern Europe during the Great Recession (2008-2012) and its determinants. Inequality changes are decomposed using an Oaxaca-Blinder-like decomposition analysis based on the Recentered Influence Function (RIF) methodology, which allows to split the overall change in inequality into endowment effects associated with changes in the distribution of inequality covariates and coefficient effects, which are related to the changing returns to these covariates. Our results show that the Gini for disposable incomes has increased over 2008-2012 in a statistically significant way for Bulgaria, Estonia, Hungary and Slovenia. For most of the countries with significant inequality increases, falling full-time employment rate played the biggest role in explaining changes in inequality. It accounted for about 50-60% of the Gini change for disposable incomes and for about 60-80% of the Gini change for market incomes. The fall in full-time employment rate had a smaller inequality-increasing effect for disposable incomes in Hungary (about 15% of the Gini increase). Increased part-time employment during the recession had either no impact on inequality or was rather inequality-decreasing. We did not find evidence that changes in the incidence of temporary jobs had any impact on income inequality.

Suggested Citation

  • Michal Brzezinski, 2017. "Income inequality and the Great Recession in Central and Eastern Europe," Working Papers 2017-28, Faculty of Economic Sciences, University of Warsaw.
    • Handle: RePEc:war:wpaper:2017-28
    as

    Download full text from publisher

    File URL: http://www.wne.uw.edu.pl/index.php/download_file/3961/
    File Function: First version, 2017
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Myeong-Su Yun, 2005. "A Simple Solution to the Identification Problem in Detailed Wage Decompositions," Economic Inquiry, Western Economic Association International, vol. 43(4), pages 766-772, October.
    2. 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.
    3. Manos Matsaganis & Chrysa Leventi, 2014. "Distributive Effects of the Crisis and Austerity in Seven EU Countries," ImPRovE Working Papers 14/04, Herman Deleeck Centre for Social Policy, University of Antwerp.
    4. F. L. Jones, 1983. "On Decomposing the Wage Gap: A Critical Comment on Blinder's Method," Journal of Human Resources, University of Wisconsin Press, vol. 18(1), pages 126-130.
    5. Nolan, Brian & Salverda, Wiemer & Checchi, Daniele & Marx, Ive & McKnight, Abigail & Toth, Istvan Gy (ed.), 2014. "Changing Inequalities and Societal Impacts in Rich Countries: Thirty Countries' Experiences," OUP Catalogue, Oxford University Press, number 9780199687428.
    6. repec:dau:papers:123456789/1552 is not listed on IDEAS
    7. Vito Peragine & Flaviana Palmisano & Paolo Brunori, 2014. "Economic Growth and Equality of Opportunity," The World Bank Economic Review, World Bank, vol. 28(2), pages 247-281.
    8. Dolls, M. & Fuest, C. & Andreas Peichl, 2011. "GINI DP 23: Automatic Stabilizers, Economic Crisis and Income Distribution in Europe," GINI Discussion Papers 23, AIAS, Amsterdam Institute for Advanced Labour Studies.
    9. Fortin, Nicole & Lemieux, Thomas & Firpo, Sergio, 2011. "Decomposition Methods in Economics," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 1, pages 1-102, Elsevier.
    10. Oaxaca, Ronald, 1973. "Male-Female Wage Differentials in Urban Labor Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(3), pages 693-709, October.
    11. François Bourguignon & Francisco H. G. Ferreira & Marta Menéndez, 2007. "Inequality Of Opportunity In Brazil," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 53(4), pages 585-618, December.
    12. Piero Esposito & Robert Stehrer, 2009. "The sector bias of skill-biased technical change and the rising skill premium in transition economies," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 36(3), pages 351-364, August.
    13. Sergio Firpo & Nicole M. Fortin & Thomas Lemieux, 2009. "Unconditional Quantile Regressions," Econometrica, Econometric Society, vol. 77(3), pages 953-973, May.
    14. Alan S. Blinder, 1973. "Wage Discrimination: Reduced Form and Structural Estimates," Journal of Human Resources, University of Wisconsin Press, vol. 8(4), pages 436-455.
    15. Ronald L. Oaxaca & Michael R. Ransom, 1999. "Identification in Detailed Wage Decompositions," The Review of Economics and Statistics, MIT Press, vol. 81(1), pages 154-157, February.
    16. Clemens Fuest & Judith Niehues & Andreas Peichl, 2010. "The Redistributive Effects of Tax Benefit Systems in the Enlarged EU," Public Finance Review, , vol. 38(4), pages 473-500, July.
    17. Valentinova Tasseva, Iva & De Agostini, Paola & Paulus, Alari, 2015. "The effect of tax-benefit changes on the income distribution in 2008-2014," EUROMOD Working Papers EM11/15, EUROMOD at the Institute for Social and Economic Research.
    18. Flemming, J.S. & Micklewright, John, 2000. "Income distribution, economic systems and transition," Handbook of Income Distribution, in: A.B. Atkinson & F. Bourguignon (ed.), Handbook of Income Distribution, edition 1, volume 1, chapter 14, pages 843-918, Elsevier.
    19. 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.
    20. David Aristei & Cristiano Perugini, 2014. "Speed and Sequencing of Transition Reforms and Income Inequality: A Panel Data Analysis," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 60(3), pages 542-570, September.
    21. Jens Holscher & Cristiano Perugini & Fabrizio Pompei, 2011. "Wage inequality, labour market flexibility and duality in Eastern and Western Europe," Post-Communist Economies, Taylor & Francis Journals, vol. 23(3), pages 271-310.
    22. Mathias Dolls & Clemens Fuest & Andreas Peichl, 2011. "Automatic Stabilizers, Economic Crisis and Income Distribution in Europe," Research in Labor Economics, in: Who Loses in the Downturn? Economic Crisis, Employment and Income Distribution, pages 227-255, Emerald Group Publishing Limited.
    23. Tim Goedemé, 2013. "How much Confidence can we have in EU-SILC? Complex Sample Designs and the Standard Error of the Europe 2020 Poverty Indicators," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 110(1), pages 89-110, January.
    24. David Barlow & Gianluca Grimalda & Elena Meschi, 2009. "Globalisation vs internal reforms as factors of inequality in transition economies," International Review of Applied Economics, Taylor & Francis Journals, vol. 23(3), pages 265-287.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Magda, Iga & Gromadzki, Jan & Moriconi, Simone, 2021. "Firms and wage inequality in Central and Eastern Europe," Journal of Comparative Economics, Elsevier, vol. 49(2), pages 499-552.
    2. Petar Peshev & Kristina Stefanova & Ivan Bozhikin & Radostina Stamenova & Ivanina Mancheva, 2022. "Is income inequality in Bulgaria underestimated in survey data?," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 3, pages 301-326.
    3. María del Rosario Ruiz Hernández. & Leonardo Adalberto Gatica., 2021. "Efectos de la gran recesión sobre la distribución del ingreso en México. (The Effects of the Great Recession on the Income Distribution in Mexico)," Ensayos Revista de Economia, Universidad Autonoma de Nuevo Leon, Facultad de Economia, vol. 0(1), pages 55-88, May.
    4. Law, Siong Hook & Naseem, N.A.M. & Lau, Wei Theng & Trinugroho, Irwan, 2020. "Can innovation improve income inequality? Evidence from panel data," Economic Systems, Elsevier, vol. 44(4).
    5. Elena Bárcena-Martín & Francisca García-Pardo & Salvador Përez-Moreno, 2023. "How Much Are Individuals Left Behind in Central and Eastern Compared to Western European Countries? A Fuzzy Comparative Analysis," Working Papers 654, ECINEQ, Society for the Study of Economic Inequality.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sonja C. Kassenboehmer & Mathias G. Sinning, 2014. "Distributional Changes in the Gender Wage Gap," ILR Review, Cornell University, ILR School, vol. 67(2), pages 335-361, April.
    2. Hansen, Henrik & Rand, John & Win, Ngu Wah, 2022. "The gender wage gap in Myanmar: Adding insult to injury?," Journal of Asian Economics, Elsevier, vol. 81(C).
    3. Domenico Depalo & Raffaela Giordano & Evangelia Papapetrou, 2015. "Public–private wage differentials in euro-area countries: evidence from quantile decomposition analysis," Empirical Economics, Springer, vol. 49(3), pages 985-1015, November.
    4. Aurora Galego & João Pereira, 2014. "Decomposition of Regional Wage Differences Along the Wage Distribution in Portugal: The Importance of Covariates," Environment and Planning A, , vol. 46(10), pages 2514-2532, October.
    5. Rosalia Castellano & Gaetano Musella & Gennaro Punzo, 2019. "Exploring changes in the employment structure and wage inequality in Western Europe using the unconditional quantile regression," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 46(2), pages 249-304, May.
    6. Bonaccolto-Töpfer, Marina & Briel, Stephanie, 2022. "The gender pay gap revisited: Does machine learning offer new insights?," Labour Economics, Elsevier, vol. 78(C).
    7. Nikolic, Jelena & Rubil, Ivica & Tomić, Iva, 2017. "Pre-crisis reforms, austerity measures and the public-private wage gap in two emerging economies," Economic Systems, Elsevier, vol. 41(2), pages 248-265.
    8. Antonio Garofalo & Rosalia Castellano & Gennaro Punzo & Gaetano Musella, 2018. "Skills and labour incomes: how unequal is Italy as part of the Southern European countries?," Quality & Quantity: International Journal of Methodology, Springer, vol. 52(4), pages 1471-1500, July.
    9. Fortin, Nicole & Lemieux, Thomas & Firpo, Sergio, 2011. "Decomposition Methods in Economics," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 1, pages 1-102, Elsevier.
    10. repec:zbw:rwirep:0220 is not listed on IDEAS
    11. Sonja C. Kassenböhmer & Mathias Sinning, 2010. "Distributional Changes in the Gender Wage Gap," Ruhr Economic Papers 0220, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    12. Kampon Adireksombat & Zheng Fang & Chris Sakellariou, 2016. "The Evolution Of Gender Wage Differentials In Thailand: 1991–2007 — An Application Of Unconditional Quantile Regression," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 61(05), pages 1-30, December.
    13. Sergio P. Firpo & Nicole M. Fortin & Thomas Lemieux, 2018. "Decomposing Wage Distributions Using Recentered Influence Function Regressions," Econometrics, MDPI, vol. 6(2), pages 1-40, May.
    14. Rosalia Castellano & Gaetano Musella & Gennaro Punzo, 2017. "Structure of the labour market and wage inequality: evidence from European countries," Quality & Quantity: International Journal of Methodology, Springer, vol. 51(5), pages 2191-2218, September.
    15. Pan, Yao, 2016. "Understanding the rural and urban household saving rise in China," Regional Science and Urban Economics, Elsevier, vol. 56(C), pages 46-59.
    16. Huong Thu Le & Ha Trong Nguyen, 2018. "The evolution of the gender test score gap through seventh grade: new insights from Australia using unconditional quantile regression and decomposition," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 7(1), pages 1-42, December.
    17. Luis Ayala & Javier Mart n-Rom n & Juan Vicente, 2023. "What Contributes to Rising Inequality in Large Cities?," LIS Working papers 850, LIS Cross-National Data Center in Luxembourg.
    18. Ferreira, Francisco H. G. & Firpo, Sergio & Messina, Julián, 2017. "Ageing Poorly? Accounting for the Decline in Earnings Inequality in Brazil, 1995-2012," IZA Discussion Papers 10656, Institute of Labor Economics (IZA).
    19. Michal Brzezinski, 2019. "Diagnosing Unhappiness Dynamics: Evidence from Poland and Russia," Journal of Happiness Studies, Springer, vol. 20(7), pages 2291-2327, October.
    20. Zhu, Rong, 2016. "Wage differentials between urban residents and rural migrants in urban China during 2002–2007: A distributional analysis," China Economic Review, Elsevier, vol. 37(C), pages 2-14.
    21. Ferreira, Francisco H. G. & Firpo, Sergio & Messina, Julián, 2017. "Ageing Poorly? Accounting for the Decline in Earnings Inequality in Brazil, 1995-2012," IZA Discussion Papers 10656, Institute for the Study of Labor (IZA).

    More about this item

    Keywords

    income inequality; decomposition; RIF regression; Great Recession; Central and Eastern Europe;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • G01 - Financial Economics - - General - - - Financial Crises
    • P24 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - National Income, Product, and Expenditure; Money; Inflation
    • P36 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Consumer Economics; Health; Education and Training; Welfare, Income, Wealth, and Poverty

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:war:wpaper:2017-28. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Marcin Bąba (email available below). General contact details of provider: https://edirc.repec.org/data/fesuwpl.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.