Growth, Income Distribution and Well-Being in Transition Countries

Posted: 10 Nov 2003

See all articles by Stephan Klasen

Stephan Klasen

University of Goettingen (Gottingen) - Faculty of Economics and Business Administration; CESifo (Center for Economic Studies and Ifo Institute); IZA Institute of Labor Economics

Carola Gruen

Government of the Federal Republic of Germany - Institute for Employment Research (IAB); University of the Witwatersrand - School of Economics and Business Sciences

Abstract

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, P27

Suggested Citation

Klasen, Stephan and Gruen, Carola, Growth, Income Distribution and Well-Being in Transition Countries. Economics of Transition, Vol. 9, No. 2, July 2001. Available at SSRN: https://ssrn.com/abstract=273151

Stephan Klasen (Contact Author)

University of Goettingen (Gottingen) - Faculty of Economics and Business Administration ( email )

Platz der Goettinger Sieben 3
Goettingen, 37073
Germany
+49-551-397303 (Phone)
+49-551-397302 (Fax)

HOME PAGE: www.vwl.wiso.uni-goettingen.de/klasen.html

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Carola Gruen

Government of the Federal Republic of Germany - Institute for Employment Research (IAB) ( email )

Regensburger Str. 104
Nuremberg, 90478
Germany

University of the Witwatersrand - School of Economics and Business Sciences ( email )

Private Bag 3
P.O. Wits 2050
Johannesburg
South Africa

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