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Income inequality, welfare, and poverty : an illustration using Ukranian data

Listed author(s):
  • Kakwani, Nanak
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    The Ukraine is now faced with economic crisis on an unprecedented scale. The government has to follow rigorous demand management policies, which entail lowering the population's standard of living. To design policies that protect the poorest and most vulnerable groups in the society, it is important to understand the nature of poverty and income inequality. The author addresses the following questions: What is the extent of income inequality and is it increasing? How can observed changes in inequality be explained? Is the burden of income tax evenly distributed across the population? The Ukranian data base is far from satisfactory, so the author's findings are only tentative. Among them: 1) the standard of living increased significantly in the late 1980s, then fell in the 1990s. Real per capita family income grew by an average of 7 percent in 1989-90, then fell about 24 percent in 1991-92. Per capita income for families dependent on government transfers fell by more than one-half. 2) Income inequality declined in the 1980s, to rise again in 1991-92. In particular, the family incomes of state and collective farm workers -- relative to industrial workers -- improved between 1980 and 1991. The increase in inequality that occurred in 1991-92 came about, among other reasons, because government benefits tended to be redistributed to richer families, not those in need. Poverty in Ukraine declined over the period 1980-91, from 38 percent of the population to 9 percent. But in 1992, 30 percent of the population was poor again, an alarming increase attributable both to a decline in real per capita income and an increase in income inequality. Still, income inequality was lower in Ukraine than in most other former republics of the Soviet Union.

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    Paper provided by The World Bank in its series Policy Research Working Paper Series with number 1411.

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    Date of creation: 31 Jan 1995
    Handle: RePEc:wbk:wbrwps:1411
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    1. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-766, May.
    2. Sen, Amartya, 1979. " Issues in the Measurement of Poverty," Scandinavian Journal of Economics, Wiley Blackwell, vol. 81(2), pages 285-307.
    3. Kakwani, Nanak C, 1977. "Applications of Lorenz Curves in Economic Analysis," Econometrica, Econometric Society, vol. 45(3), pages 719-727, April.
    4. Atkinson,Anthony Barnes & Micklewright,John, 1992. "Economic Transformation in Eastern Europe and the Distribution of Income," Cambridge Books, Cambridge University Press, number 9780521438827, March.
    5. Fields, Gary S, 1979. "Income Inequality in Urban Colombia: A Decomposition Analysis," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 25(3), pages 327-341, September.
    6. Deaton,Angus & Muellbauer,John, 1980. "Economics and Consumer Behavior," Cambridge Books, Cambridge University Press, number 9780521296762, December.
    7. Graham Pyatt & Chau-nan Chen & John Fei, 1980. "The Distribution of Income by Factor Components," The Quarterly Journal of Economics, Oxford University Press, vol. 95(3), pages 451-473.
    8. Kakwani, Nanak, 1980. "On a Class of Poverty Measures," Econometrica, Econometric Society, vol. 48(2), pages 437-446, March.
    9. Sen, Amartya K, 1976. "Poverty: An Ordinal Approach to Measurement," Econometrica, Econometric Society, vol. 44(2), pages 219-231, March.
    10. Clark, Stephen & Hemming, Richard & Ulph, David, 1981. "On Indices for the Measurement of Poverty," Economic Journal, Royal Economic Society, vol. 91(362), pages 515-526, June.
    11. Kakwani, Nanak, 1987. "Inequality of income derived from survey data during the inflationary period," Economics Letters, Elsevier, vol. 23(4), pages 387-388.
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