Growth, Income Distribution and Well-Being in Transition Countries
University of Goettingen (Gottingen) - Faculty of Economics and Business Administration; CESifo (Center for Economic Studies and Ifo Institute for Economic Research); Institute for the Study of Labor (IZA)
Government of the Federal Republic of Germany - Institute for Employment Research (IAB); University of the Witwatersrand - School of Economics and Business Sciences
Economics of Transition, Vol. 9, No. 2, July 2001
We apply several well-being measures that combine average income with a measure of inequality to international and intertemporal comparisons of well-being in transition countries. Our well-being measures drastically change the impression of levels and changes in well-being compared to a traditional reliance on income measures. Due to low inequality and moderate income levels, socialist countries enjoyed relatively high levels of economic well-being. In the transition process, rising inequality and falling incomes have led to a dramatic absolute decline in well-being and a considerable drop in relative well-being vis-a-vis non-transition countries. We also find a close correlation between income losses and inequality increases. While the transition has been successful in expanding political and civil rights, our indicators suggest that most transition countries are still below the level of economic well-being of the late 1980s.
Keywords: transition economies, well-being, inequality, income distribution.
JEL Classification: D6, O15, P27Accepted Paper Series
Date posted: November 10, 2003
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