Inequality, Poverty, and Social Protection in Bulgaria

Abstract

Absolute poverty has dropped markedly in Bulgaria but income inequality has increased substantially in the aftermath of the GFC. This increase is due to a rise in market income inequality that was compounded by a reduction in fiscal redistribution. The redistributive role of direct taxation has declined with the introduction of a flat tax and social spending is relatively low and decreasing (as a share of GDP), is concentrated on a few social risks, and experienced a decline in its redistributive efficiency. The COVID-19 crisis is likely to deepen income inequality, increasing the room for redistributive policies.

Keywords: Inequality, Poverty, Social Protection, Bulgaria, European Union

JEL Classification: D63, H23, H53, I32, I38, O15