Earnings inequality and tax progressivity in Slovenia, 1991–2009

Tine Stanovnik () and Miroslav Verbič
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Tine Stanovnik: Faculty of Economics, University of Ljubljana & Institute for Economic Research, Kardeljeva plošcad 17, 1000 Ljubljana, Slovenia

Acta Oeconomica, 2013, vol. 63, issue 4, 405-421

Abstract: This paper analyses the distribution of employee earnings in Slovenia in the period 1991–2009. The analysis is based on large samples from the personal income tax (PIT) files. According to the Gini coefficient, increases in earnings inequality were moderate; however, relatively large increases in the shares accruing to the top 5% and top 1% of employees did occur. Inequality of employees’ after- tax earnings (i.e. net of employee social contributions and PIT) remained fairly stable in this time period, due to the increasing progressivity of PIT, as shown by the Kakwani index of progressivity. Increases in progressivity of the personal income tax came in leaps, following the introduction of new income tax legislation. Institutional settings and the introduction of minimum wage legislation in 1995 also appear to have moderated inequality increases, which were quite large in the early years of the transition.

Keywords: earnings inequality; tax progressivity; Slovenia (search for similar items in EconPapers)
JEL-codes: D33 H24 (search for similar items in EconPapers)
Date: 2013
Note: The authors are immensely grateful to Matej Divjak from the Statistical Office of the Republic of Slovenia, to Mojca Centa Debeljak and Branko Gorjan from the Tax Administration of the Republic of Slovenia, and to Stane Gros from the RRC Computer services.
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