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Economic Inequality in Central, East and Southeast Europe


  • Mario Holzner

    () (The Vienna Institute for International Economic Studies, wiiw)

  • Sebastian Leitner

    () (The Vienna Institute for International Economic Studies, wiiw)


The article analyses the issue of economic inequality in the transition economies of Central, East and Southeast Europe. It consists of a literature review and a descriptive analysis as well as an econometric modelling exercise. In the fi rst part we point at the fact that the rise in income inequality was triggered by the magnitude of transitional output loss and a reduction of formal employment. Rising wage inequality was at the core of total income dispersion, while government transfers had a redistributional function only in Central and Southeast European countries contrary to the Commonwealth of Independent States (CIS). In the econometric analysis it is found that for instance public utilities infrastructure liberalisation has increased inequality in transition, while price and trade liberalisation has decreased it. A high share of employment in industry and high government expenditures are connected with less inequality.

Suggested Citation

  • Mario Holzner & Sebastian Leitner, 2008. "Economic Inequality in Central, East and Southeast Europe," wiiw Balkan Observatory Working Papers 74, The Vienna Institute for International Economic Studies, wiiw.
  • Handle: RePEc:wii:bpaper:074

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    References listed on IDEAS

    1. Guillermo A. Calvo & Carmen M. Reinhart, 2002. "Fear of Floating," The Quarterly Journal of Economics, Oxford University Press, vol. 117(2), pages 379-408.
    2. Sanja Kalra, 1998. "Inflation and Money Demand in Albania," IMF Working Papers 98/101, International Monetary Fund.
    3. Joannes Mongardini & Johannes Mueller, 2000. "Ratchet Effects in Currency Substitution: An Application to the Kyrgyz Republic," IMF Staff Papers, Palgrave Macmillan, vol. 47(2), pages 1-3.
    4. Calvo, Guillermo A, 2001. "Capital Markets and the Exchange Rate with Special Reference to the Dollarization Debate in Latin America," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 33(2), pages 312-334, May.
    5. Patrick Osakwe & Lawrence Schembri, 1998. "Currency crises and fixed exchange rates in the 1990s: A review," Bank of Canada Review, Bank of Canada, vol. 1998(Autumn), pages 23-38.
    6. Peeters, Marga, 2005. "What about monetary transmission in Albania? Is the exchange rate pass-through (still) the main channel?," MPRA Paper 23671, University Library of Munich, Germany, revised 24 Oct 2005.
    7. Adalbert Winkler & Francesco Mazzaferro & Carolin Nerlich & Christian Thimann, 2004. "Official dollarisation/euroisation - motives, features and policy implications of current cases," Occasional Paper Series 11, European Central Bank.
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    Cited by:

    1. Mario Holzner, 2010. "Inequality, Growth and Public Spending in Central, East and Southeast Europe," wiiw Working Papers 71, The Vienna Institute for International Economic Studies, wiiw.
    2. Sebastian Leitner, 2015. "Effects of Income Inequality on Population Health and Social Outcomes at the Regional Level in the EU," wiiw Working Papers 113, The Vienna Institute for International Economic Studies, wiiw.
    3. Aleksandra Parteka, 2012. "Skilled-Unskilled Wage Gap Versus Evolving Trade And Labour Market Structures in the EU," Working Papers 1204, Instytut Rozwoju, Institute for Development.
    4. Gorana Krstić, 2016. "Why Income Inequality Is So High In Serbia: Empirical Evidence And A Measurement Of The Key Factors," Economic Annals, Faculty of Economics, University of Belgrade, vol. 61(210), pages 23-46, July - Se.
    5. Ângelo Barroso & Cristina Chaves & Francisco Vitorino Martins & Manuel Castelo Branco, 2016. "On the possibility of sustainable development with less economic growth: a research note," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 18(5), pages 1399-1414, October.
    6. Mario Holzner, 2013. "Inequality and the Crisis: A Causal Inference Analysis," wiiw Balkan Observatory Working Papers 110, The Vienna Institute for International Economic Studies, wiiw.
    7. Gligorov, Vladimir, 2009. "Mobility and Transition in Integrating Europe," MPRA Paper 19198, University Library of Munich, Germany.
    8. Monica Szeles, 2013. "Re-examining the relationship between economic growth and inequality in the New Member States," Quality & Quantity: International Journal of Methodology, Springer, vol. 47(5), pages 2799-2813, August.
    9. repec:onb:oenbfi:y:2005:i:1:b:5 is not listed on IDEAS
    10. Gorana Krstić & Peter Sanfey, 2008. "Earnings Inequality and the Informal Economy: Evidence from Serbia," wiiw Balkan Observatory Working Papers 75, The Vienna Institute for International Economic Studies, wiiw.

    More about this item


    income distribution; inequality; transition economies;

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • P36 - Economic Systems - - Socialist Institutions and Their Transitions - - - Consumer Economics; Health; Education and Training; Welfare, Income, Wealth, and Poverty


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