IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

Welfare Disparities in Transition Economies: Case of Estonia

Listed author(s):
  • Helje Kaldaru


  • Viktor Trasberg


Registered author(s):

    The purpose of the article is to analyze the changes in income distribution in transitional societies and show the impact of income disparities on economic growth and social development. Particularly the article analyses the income differences by the sectors and regions of Estonia. A decade ago substantial disparities in income were considered mainly as a problem of developing countries. In communist societies income distribution was considerably more equal despite the fact that average income level was much lower than in the Western welfare states. The situation in the former communist countries significantly changed after reforms began in the early 90s, when a large differentiation by income and wealth rapidly took place. Theoretically, the uneven income distribution has been considered as a supportive factor to economic growth. Recent empirical research (as well as the analyses done by the authors) generally does not confirm that. The authors emphasize that considerable differences in income are considered as "unfair" by large groups of the population. The result might be destabilization in society and low economic growth. Also a human factor plays a more important role than it was assumed earlier. In fact, high technology transfers to the transitional countries support economic growth. However, production efficiency cannot be achieved without a highly qualified and motivated labor force. Large differences in income often benefit a limited number of highly qualified professionals but ruin the morale and eventually qualifications of large groups of employees. As a conclusion, the transitional economies have to decrease income and regional disparities to maintain sustainable growth.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL:
    Download Restriction: no

    Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa01p288.

    in new window

    Date of creation: Aug 2001
    Handle: RePEc:wiw:wiwrsa:ersa01p288
    Contact details of provider: Postal:
    Welthandelsplatz 1, 1020 Vienna, Austria

    Web page:

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

    in new window

    1. Alesina, Alberto & Perotti, Roberto, 1996. "Income distribution, political instability, and investment," European Economic Review, Elsevier, vol. 40(6), pages 1203-1228, June.
    2. Robert J. Barro, 1999. "Inequality, Growth, and Investment," NBER Working Papers 7038, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:wiw:wiwrsa:ersa01p288. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Gunther Maier)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.