Inequality in Belarus from 1995 to 2005

Abstract

Income and consumption inequality increased in all transition economies, albeit to very different levels. Existing findings suggest that countries that were slow to undertake premarket reforms experienced the largest increase in inequality, with the notable exception of Belarus, one of the least reformed ex-Soviet republics, that nevertheless has inequality comparable to the most advanced and least unequal transition countries of Central Europe. This article studies the evolution of inequality in Belarus in 1995-2005, decomposes inequality by region and source of income, and provides cross-country comparisons. Specifically, a comparison of Belarus and Ukraine, based on DiNardo-Fortin-Lemieux Counterfactual Kernel Densities, suggests that the large difference in inequality levels is due to different income policies of the two countries: Belarus is unusual not only in its lack of privatization, but also in that it kept many of the old-style Soviet social security features.

Keywords: Belarus, Ukraine, transition, income inequality, expenditure inequality, social security

JEL Classification: D31, D63, H55, O15