Measurement and decomposition of Lithuania’s income inequality

Nerijus Černiauskas and Andrius Ciginas (aciginas@lb.lt)
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Andrius Ciginas: Bank of Lithuania & Vilnius University

No 14, Bank of Lithuania Discussion Paper Series from Bank of Lithuania

Abstract: Despite Lithuania’s household income inequality being among the highest in the European Union (EU), little empirical work has been carried out to explain such disparities. In this article, we use the EU Statistics on Income and Living Conditions sample micro data. We confirm that income inequality in Lithuania is high compared to the EU average and find that it is robust to inequality measure or equivalence scale used. We have also decomposed household disposable income inequality by subgroups and factors. We find that the number of employed household members in Lithuania’s households affects income inequality more as compared to the EU. It is related to a larger labour income, and self-employment income in particular, contribution to inequality in Lithuania as opposed to the EU. Moreover, transfers and taxes have a smaller impact on reducing inequality in Lithuania than in the EU.

Keywords: Income inequality; factor decomposition; subgroup decomposition; Lithuania; European Union (search for similar items in EconPapers)
JEL-codes: D31 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2019-09-20
New Economics Papers: this item is included in nep-eur
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