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Eastern Europe and Russian Federation - Distributional impact of cash and in-kind social transfers in Eastern Europe and Russia

  • Milanovic, Branko

The author empirically explores the distributional impactof social transfers in cash and in-kind in Russia and Eastern Europe. He shows that cash transfers, on the whole, are distributed almost uniformly (equally per capita) regardless of one's position in income distribution. By contrast, in market economies, absolute amounts of cash transfers decline as one moves up the income ladder. The family allowance is the only type of cash transfer that is somewhat focused on the poor in the socialist economies. Family allowances are paid for children, and since larger households are typically poorer, some redistribution is achieved. Education benefits are also slanted slightly toward the poor, primarily through the high share of public spending on primary education. As the level of schooling rises, the distribution of education benefits resembles more closely the distribution of income. Health care benefits are distributed uniformly, per capita. In market economies, on the other hand, public health benefits are targeted more to the poor - primarily because the rich often opt out of publicly-run programs. During the transition, cash benefits in the formely socialist countries must become more targeted as well as smaller in absolute amounts. The reforming socialist economies are likely to follow the corporatist earnings-linked model of continental Europe.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 1054.

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Date of creation: 31 Dec 1992
Date of revision:
Handle: RePEc:wbk:wbrwps:1054
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  1. Davies, J. B. & Shorrocks, A. F., 1989. "Optimal grouping of income and wealth data," Journal of Econometrics, Elsevier, vol. 42(1), pages 97-108, September.
  2. Morrisson, Christian, 1984. "Income distribution in East European and Western countries," Journal of Comparative Economics, Elsevier, vol. 8(2), pages 121-138, June.
  3. Sandstrom, Arne & Wretman, Jan H & Walden, Bertil, 1988. "Variance Estimators of the Gini Coefficient--Probability Sampling," Journal of Business & Economic Statistics, American Statistical Association, vol. 6(1), pages 113-19, January.
  4. Bergson, Abram, 1984. "Income Inequality under Soviet Socialism," Journal of Economic Literature, American Economic Association, vol. 22(3), pages 1052-99, September.
  5. Okrasa, W., 1988. "Redistribution and the two dimensions of inequality : An east-west comparison," European Economic Review, Elsevier, vol. 32(2-3), pages 633-643, March.
  6. Danziger, Sheldon & Haveman, Robert H & Smolensky, Eugene, 1977. "The Measurement and Trend of Inequality: Comment," American Economic Review, American Economic Association, vol. 67(3), pages 505-12, June.
  7. Paglin, Morton, 1975. "The Measurement and Trend of Inequality: A Basic Revision," American Economic Review, American Economic Association, vol. 65(4), pages 598-609, September.
  8. Jenkins, Stephen, 1988. "Reranking and the Analysis of Income Redistribution," Scottish Journal of Political Economy, Scottish Economic Society, vol. 35(1), pages 65-76, February.
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