 Explaining the increase in inequality during transitionThe Economics of Transition, 1999, vol. 7, issue 2, 299-341 Abstract: This paper attempts to explain the increase in inequality that has been observed in all transition economies by constructing a simple model of change in composition of employment during the transition. The change consists of the ‘hollowing‐out’ of the state‐sector middle class as it moves into either the ‘rich’ private sector or the ‘poor’ unemployed sector. The predictions of the model are contrasted with the empirical evidence from annual household income surveys from six transition economies (Bulgaria, Hungary, Latvia, Poland, Russia and Slovenia) over the period 1987‐95. We find that the most important factor driving overall inequality upwards was increased inequality of wage distribution. The non‐wage private sector contributed strongly to inequality only in Latvia and Russia. Pensions, paradoxically, also pushed inequality up in Central Europe, while non‐pension social transfers were too small everywhere and too poorly focussed to make much difference. Date: 1999 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:etrans:v:7:y:1999:i:2:p:299-341 Ordering information: This journal article can be ordered from Access Statistics for this article The Economics of Transition is currently edited by Philippe Aghion and Wendy Carlin More articles in The Economics of Transition from The European Bank for Reconstruction and Development Contact information at EDIRC. |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.