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Growth, income distribution and well‐being in transition countries

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  • Carola Grün
  • Stephan Klasen

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‐à‐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. JEL classification: D6, O15, P27.

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  • Carola Grün & Stephan Klasen, 2001. "Growth, income distribution and well‐being in transition countries," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 9(2), pages 359-394, July.
    • Handle: RePEc:bla:etrans:v:9:y:2001:i:2:p:359-394
    DOI: 10.1111/1468-0351.00080
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    2. Stefano Bartolini & Małgorzata Mikucka & Francesco Sarracino, 2017. "Money, Trust and Happiness in Transition Countries: Evidence from Time Series," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 130(1), pages 87-106, January.
    3. Maier, Rolf, 2005. "External Debt and Pro-Poor Growth," Proceedings of the German Development Economics Conference, Kiel 2005 23, Verein für Socialpolitik, Research Committee Development Economics.
    4. Simona Šarotar Žižek & Matjaž Mulej & Sonja Treven, 2010. "Requisite Holism Of Individuals As A Precondition For The Humankind’S Way Out From The 2008- Crisis," Analele Stiintifice ale Universitatii "Alexandru Ioan Cuza" din Iasi - Stiinte Economice (1954-2015), Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 57, pages 399-419, november.
    5. Rolf Maier, 2005. "Exchange Rate Regimes and Pro-Poor Growth," International Finance 0504008, University Library of Munich, Germany.
    6. Jesus Crespo Cuaresma & Stephan Klasen & Konstantin M. Wacker, 2016. "There is poverty convergence," Department of Economics Working Papers wuwp213, Vienna University of Economics and Business, Department of Economics.
    7. David Aristei & Cristiano Perugini, 2014. "Speed and Sequencing of Transition Reforms and Income Inequality: A Panel Data Analysis," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 60(3), pages 542-570, September.
    8. Jens Holscher & Cristiano Perugini & Fabrizio Pompei, 2011. "Wage inequality, labour market flexibility and duality in Eastern and Western Europe," Post-Communist Economies, Taylor & Francis Journals, vol. 23(3), pages 271-310.
    9. Christoph Bühler, 2003. "Additional work, family agriculture, and the birth of a first or a second child in Russia at the beginning of the 1990s," MPIDR Working Papers WP-2003-012, Max Planck Institute for Demographic Research, Rostock, Germany.
    10. Laila Porras, 2010. "Labour Market Trends during Post-Socialist Transformation: The Cases of the Czech Republic, Hungary and Russia," QA - Rivista dell'Associazione Rossi-Doria, Associazione Rossi Doria, issue 4, December.
    11. Rolf Maier, 2005. "External Debt and Pro-Poor Growth," Macroeconomics 0504031, University Library of Munich, Germany.
    12. Aristei, David & Perugini, Cristiano, 2012. "Inequality and reforms in transition countries," Economic Systems, Elsevier, vol. 36(1), pages 2-10.
    13. Carola Grün & Stephan Klasen, 2003. "Growth, Income Distribution, and Well-Being: Comparisons across Space and Time," CESifo Working Paper Series 837, CESifo.
    14. Keane, Michael & Prasad, Eswar, 2001. "Social Transfers and Inequality During the Polish Transition," MPRA Paper 54326, University Library of Munich, Germany.
    15. Gul, Adnan, 2008. "Is external debt an effective way of bringing economic reforms?," MPRA Paper 10979, University Library of Munich, Germany.
    16. Hazans, Mihails, 2003. "Commuting in the Baltic States: Patterns, determinants and gains," ZEI Working Papers B 02-2003, University of Bonn, ZEI - Center for European Integration Studies.
    17. Molnár, György & Kapitány, Zsuzsa, 2006. "Mobilitás, bizonytalanság és szubjektív jóllét Magyarországon [Mobility, uncertainty and subjective welfare in Hungary]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(10), pages 845-872.
    18. Natasha Trajkova Najdovska & Monika Angeloska Dichovska, 2017. "Stylized Economic Facts Of Transition," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 6, pages 4-17, December.
    19. Gruen, Carola & Klasen, Stephan, 2012. "Has transition improved well-being?," Economic Systems, Elsevier, vol. 36(1), pages 11-30.
    20. Miriam Frey, 2016. "Income Inequality Effects of Ukraine’s Trade Liberalization with the EU. Are there 'two Ukraines'?," EcoMod2016 9664, EcoMod.
    21. Hazans, Mihails, 2002. "Social returns to commuting in the Baltic states," ERSA conference papers ersa02p232, European Regional Science Association.

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    More about this item

    JEL classification:

    • D6 - Microeconomics - - Welfare Economics
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • P27 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Performance and Prospects

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