Inequality, Transfers and Growth: New Evidence From the Economic Transition in Poland

Eswar Prasad and Michael Keane ()

No 2000/117, IMF Working Papers from International Monetary Fund

Abstract: This paper challenges the conventional wisdom that inequality in Poland increased markedly during the economic transition. Income and consumption inequality actually declined in 1990-92 and rose only moderately above pre-transition levels by 1997. However, inequality in labor earnings increased markedly and consistently during 1990-97. Social transfer mechanisms, including pensions, helped mitigate increases in overall inequality and poverty. More importantly, these transfer mechanisms were well-designed to reduce political resistance to market-oriented reforms in the early years of transition, paving the way for rapid growth. Cross-country evidence from transition economies is consistent with this interpretation and with recent literature suggesting that inequality-reducing redistribution can enhance growth.

Keywords: WP; household income; poverty lines; revenue item; income residual; kernel density; Adj. income; consumption inequality; income net; Income inequality; Income; Income distribution; Consumption; Wages; Eastern Europe (search for similar items in EconPapers)
Pages: 52
Date: 2000-06-01
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Citations: View citations in EconPapers (16)

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Related works:
Journal Article: Inequality, Transfers, And Growth: New Evidence From The Economic Transition In Poland (2002)
Working Paper: Inequality, Transfers and Growth: New Evidence from the Economic Transition in Poland (2002)
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