Prasad, Eswar S.: Inequality, Transfers and Growth: New Evidence from the Economic Transition in Poland
World Conference Econometric Society, 2000, Seattle

Michael Keane, New York University and Yale University
Eswar S. Prasad, International Monetary Fund
Inequality, Transfers and Growth: New Evidence from the Economic Transition in Poland
Session: C-5-13  Sunday 13 August 2000  by Prasad, Eswar S.
This paper challenges the conventional wisdom that income inequality in Poland increased substantially during the economic transition that began in 1989-90. The results, based on micro data from the 1985-92 Household Budget Surveys, indicate that overall income inequality increased during the initial stages of the transition but then declined to pre-transition levels. Consumption distributions reveal a similar pattern. However, earnings inequality among workers did increase markedly during the transition and the relative well-being of different socioeconomic groups was altered. Absolute poverty levels increased during the transition, but this increase is attributable to declines in mean income and consumption rather than to changes in inequality. We find that social transfer mechanisms played an important role in between-group income dynamics as well as in mitigating increases in both overall inequality and poverty.


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