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Economic transition and the distributions of income and wealth

Author

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  • Ferreira, Francisco H. G.

Abstract

Using a model of wealth distribution dynamics and occupational choice, the author investigates the distributional consequences of policies and developments associated with the transition from central planning to a market system. The model suggests that even an efficient privatization designed to be egalitarian may lead to increases in inequality (and possibly poverty), both during the transition and in the new steady state. Creating new markets in services that are also supplied by the public sector may also contribute to an increase in inequality. So can labor market reforms that lead to a decompression of the earnings structure and to greater flexibility in employment. The results underline the importance of retaining government provision of basic public goods and services, removing barriers that prevent the participation of the poor in the new private sector, and ensuring that suitable safety nets are in place.

Suggested Citation

  • Ferreira, Francisco H. G., 1997. "Economic transition and the distributions of income and wealth," Policy Research Working Paper Series 1808, The World Bank.
  • Handle: RePEc:wbk:wbrwps:1808
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    References listed on IDEAS

    as
    1. Atkinson,Anthony Barnes & Micklewright,John, 1992. "Economic Transformation in Eastern Europe and the Distribution of Income," Cambridge Books, Cambridge University Press, number 9780521438827, April.
    2. Oded Galor & Joseph Zeira, 1993. "Income Distribution and Macroeconomics," Review of Economic Studies, Oxford University Press, vol. 60(1), pages 35-52.
    3. Benabou, R., 1996. "Unequal Societies," Working Papers 96-17, C.V. Starr Center for Applied Economics, New York University.
    4. Ferreira, Francisco H. G. & Litchfield, Julie A., 1998. "Education or inflation? The roles of structural factors and macroeconomic instability in explaining Brazilian inequality in the 1980s," LSE Research Online Documents on Economics 6586, London School of Economics and Political Science, LSE Library.
    5. Simon Commander & Andrei Tolstopiatenko & Ruslan Yemtsov, 1999. "Channels of redistribution: Inequality and poverty in the Russian transition," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 7(2), pages 411-447, July.
    6. Thesia I. Garner & Katherine Terrell, 1997. "Changes in Distribution and Welfare in Transition Economies: Market vs. Policy in the Czech Republic and Slovakia," William Davidson Institute Working Papers Series 77, William Davidson Institute at the University of Michigan.
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