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Poverty in Poland : 1978-88

Listed author(s):
  • Milanovic, Branko

The economic crisis that began in Poland in 1978 significantly reduced the population's average incomes and increased the proportion of the population living below the poverty line by 10 percentage points. The composition of thepoor has also changed. Before the crisis, most of the poor lived in rural areas; now 70 percent of them live in cities. This change occurred because of a sharp jump in poverty among workers in the socialized sector, whose real wages declined. The most important direct cause of increased poverty in the second half of the 1980s was increased poverty in workers'households. The second most important cause was demographic: in shifting to retirement, some workers'households joined the ranks of the poor. The only groups for which the incidence of poverty decreased was mixed households. Until the end of the period studied, no unemployment appeared. The wage bill was reduced by uniform cuts in real wages - so the wage and the overall distribution of income remained practically unchanged. The real income of pensioners'households decreased almost as much as that of workers'households. Farm and mixed households weathered the crisis better than workers and pensioners. This was because farmers and mixed households had more flexibility about economic decisions. Farmers could change the composition of their crops and mixed households could also vary their labor inputs between work in socialized industry and private agriculture.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 637.

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Date of creation: 31 Mar 1991
Handle: RePEc:wbk:wbrwps:637
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