Grey Market and the Income Inequalities in the Post-Socialist Economies

Posted: 6 Dec 2010

See all articles by Justyna Przychodzen

Justyna Przychodzen

University of Liverpool - e-business Division

Wojciech Kamil Przychodzen

University of Deusto

Date Written: April 5, 2009

Abstract

This paper analyzes the relation between the shadow economy and income inequalities. For transition economies, the share of output produced in the informal economy is positively correlated with income inequalities. This hypothesis is strongly supported by empirical data for 17 transition economies in 2005. Unofficially gained incomes contribute significantly to the increasing income inequalities in post-socialist countries. Additional incomes from unregistered activities are the domain of the richest and the progressive tax system is not strong enough to counteract this phenomenon.

Keywords: income inequalities, transition economies, informal economy

JEL Classification: A10, D63, O17

Suggested Citation

Przychodzen, Justyna and Przychodzen, Wojciech Kamil, Grey Market and the Income Inequalities in the Post-Socialist Economies (April 5, 2009). Available at SSRN: https://ssrn.com/abstract=1720583 or http://dx.doi.org/10.2139/ssrn.1720583

Justyna Przychodzen (Contact Author)

University of Liverpool - e-business Division ( email )

United Kingdom

Wojciech Kamil Przychodzen

University of Deusto ( email )

Bilbao, 48007
Spain

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