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2015 | Buch

Introduction Kapitel lesen Erstes Kapitel lesen

Inequalities During and After Transition in Central and Eastern Europe

herausgegeben von: Cristiano Perugini, Fabrizio Pompei

Verlag: Palgrave Macmillan UK

Buchreihe : Studies in Economic Transition

Enthalten in: Springer Professional "Wirtschaft+Technik" , Springer Professional "Technik" , Springer Professional "Wirtschaft"

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Über dieses Buch

The book deals with the key aspects of social and economic inequalities developed during the transition of the formerly planned European economies. Particular emphasis is given to the latest years available in order to consider the effects of the global crisis started in 2008-2009.

Inhaltsverzeichnis

Frontmatter

Introduction

Introduction
Abstract
The aim of this book is to investigate, theoretically and empirically, the key aspects of social and economic inequality that have developed during the transition of the Formerly Planned European Economies. Although the focus is mainly on the countries of Central-Eastern Europe and of the Baltic region that joined the EU between 2004 and 2007, the coverage of the analysis is wherever possible extended to the countries of the former Soviet Union and former Yugoslavia. The empirical analyses broadly focus on the two decades after the start of transition; however, particular emphasis is given to the most recent years for which data are available in order to consider the effects of the global crisis that began in 2008–2009. All analyses have been carried out by adopting a comparative perspective, and Western EU Member States are used whenever possible as benchmarks.
Cristiano Perugini, Fabrizio Pompei
1. Income Distribution During and After Transition: A Conceptual Framework
Abstract
The transformation from planned to market economies undertaken after 1989 by all new European Union members (NEUMs), former Soviet Union countries (FSU) and Western Balkans (WBs) is a fascinating, extremely complex phenomenon. Extensive market-oriented reforms were implemented in all fields, while many of the rules characterising the pre-transition society were rapidly dismissed. State influence was radically weakened in favour of market liberalisations, firm privatisations and international opening to trade and foreign investments. The whole process allowed the existing visible and hidden inequalities to develop, and new ones, associated with restructuring and vast structural change, to unfold. During the 1990s, distributional patterns in the Formerly Planned Economies evolved at quite a different pace, with inequalities reaching, and in some cases stabilising at, diversified levels after more than 20 years of transition (Aristei and Perugini, 2012). Due to the complexity of the forces into play (economic, social, political and institutional), the study of any aspect of transition is in itself a challenging task; but when distributive patterns are the focus of the analysis, the picture becomes even more intriguing and complicated. This is due not only to the fact that inequality is in itself a multifaceted concept that can then be looked at from many different and complementary perspectives, but also to the fact that basically every social, economic, structural and institutional change affects the distribution of income, either directly or indirectly.
Cristiano Perugini, Fabrizio Pompei

Personal and Functional Income Distribution Patterns During Transition

Frontmatter
1. Income Distribution During and After Transition: A Conceptual Framework
Abstract
The transformation from planned to market economies undertaken after 1989 by all new European Union members (NEUMs), former Soviet Union countries (FSU) and Western Balkans (WBs) is a fascinating, extremely complex phenomenon. Extensive market-oriented reforms were implemented in all fields, while many of the rules characterising the pre-transition society were rapidly dismissed. State influence was radically weakened in favour of market liberalisations, firm privatisations and international opening to trade and foreign investments. The whole process allowed the existing visible and hidden inequalities to develop, and new ones, associated with restructuring and vast structural change, to unfold. During the 1990s, distributional patterns in the Formerly Planned Economies evolved at quite a different pace, with inequalities reaching, and in some cases stabilising at, diversified levels after more than 20 years of transition (Aristei and Perugini, 2012). Due to the complexity of the forces into play (economic, social, political and institutional), the study of any aspect of transition is in itself a challenging task; but when distributive patterns are the focus of the analysis, the picture becomes even more intriguing and complicated. This is due not only to the fact that inequality is in itself a multifaceted concept that can then be looked at from many different and complementary perspectives, but also to the fact that basically every social, economic, structural and institutional change affects the distribution of income, either directly or indirectly.
Cristiano Perugini, Fabrizio Pompei
2. The Drivers of Personal Income Inequality in Transition, and the Role of Reform Approaches
Abstract
The transition of the Formerly Planned Economies in the ‘90s has provided a stunning opportunity for economists to observe a process of systemic transformation that has never happened or even been theorised before. The transition patterns in the Central Eastern European, Baltic, Western Balkan and former Soviet Union countries took a variety of forms in terms of speed and sequencing of reforms, capturing the attention of an extensive literature (e.g., Murrell, 1992; Roland, 2001). Understandably, the debate and the empirical research focused almost exclusively on what sequencing and (more importantly) what speed of reforms would be more beneficial to short-term output dynamics. Among the very first contributions, Fischer et al. (1996) and de Melo et al. (1997) used a cumulative liberalisation index in growth regressions along with other macroeconomic variables, and found that the index was positively related to growth. The use of a simple cumulative index of transition was strongly criticised on the basis that it contains information about the extent of reforms undertaken earlier but ignores their pace and does not separate the effects of the reform level nor indeed those of earlier reforms (Staehr, 2005). Subsequent attempts to provide more accurate measurement of the speed of reform were, for example, Berg et al. (1999), Wolf (1999), Heybey and Murrell (1999), Staehr (2005) and Godoy and Stiglitz (2006).
David Aristei, Cristiano Perugini
3. Functional Income Distribution in European Transition Countries
Abstract
The labour share, the proportion of income that is distributed to workers, has been decreasing in most OECD countries since the mid-1980s, a phenomenon that has attracted much interest among economists and policy makers because of its implications for growth and welfare. In fact, the labour share is considered a measure of how the benefits of growth are distributed between labour and capital, and its decrease indicates that workers in a country are getting a declining share of the wealth produced within that country.
Ana Rincon-Aznar, Michela Vecchi, Francesco Venturini
4. Emigration, Employment and Inequality in Post-communist Countries
Abstract
Part of the important debate on migration in the European Union is strictly connected to the increase in its size that occurred in 2004 and 2007, when 10 Formerly Planned Economies of Central and Eastern Europe and the Baltic region entered the EU. Although the Treaty on the Functioning of European Union established for its Member States’ citizens the right to move freely within EU borders, many Western countries feared massive immigration from Eastern Europe and resorted to the Treaty of Accession to impose some temporary restrictions on immigration (Kahanec and Zimmermann, 2009; Kahanec et al., 2014). Public opinion and the political debate that followed these actions led many scholars to concentrate on the effects of migration in the EU-15 receiving countries (EIC, 2009; European Commission, 2010, 2011; Boeri, 2010). In addition to measuring real inflows of migrants, some authors investigated their characteristics and education profiles, paying attention to their return to education or the degree of their satisfaction in the Western EU labour markets (Galgóczi et al., 2012; Bartram, 2013). Bettin (2012) and Huber (2012) found strong evidence of overqualification and of a corresponding underutilisation of EU-10 migrant workers’ skills in the Western EU countries. Of course these aspects are of prominent importance, and question the migration policies established to improve the efficiency of cross-border labour mobility (Galgóczi et al., 2012).
Cristiano Perugini, Fabrizio Pompei

Microeconomic Analysis of Income Distributions and the Role of Institutional Settings

Frontmatter
2. The Drivers of Personal Income Inequality in Transition, and the Role of Reform Approaches
Abstract
The transition of the Formerly Planned Economies in the ‘90s has provided a stunning opportunity for economists to observe a process of systemic transformation that has never happened or even been theorised before. The transition patterns in the Central Eastern European, Baltic, Western Balkan and former Soviet Union countries took a variety of forms in terms of speed and sequencing of reforms, capturing the attention of an extensive literature (e.g., Murrell, 1992; Roland, 2001). Understandably, the debate and the empirical research focused almost exclusively on what sequencing and (more importantly) what speed of reforms would be more beneficial to short-term output dynamics. Among the very first contributions, Fischer et al. (1996) and de Melo et al. (1997) used a cumulative liberalisation index in growth regressions along with other macroeconomic variables, and found that the index was positively related to growth. The use of a simple cumulative index of transition was strongly criticised on the basis that it contains information about the extent of reforms undertaken earlier but ignores their pace and does not separate the effects of the reform level nor indeed those of earlier reforms (Staehr, 2005). Subsequent attempts to provide more accurate measurement of the speed of reform were, for example, Berg et al. (1999), Wolf (1999), Heybey and Murrell (1999), Staehr (2005) and Godoy and Stiglitz (2006).
David Aristei, Cristiano Perugini
3. Functional Income Distribution in European Transition Countries
Abstract
The labour share, the proportion of income that is distributed to workers, has been decreasing in most OECD countries since the mid-1980s, a phenomenon that has attracted much interest among economists and policy makers because of its implications for growth and welfare. In fact, the labour share is considered a measure of how the benefits of growth are distributed between labour and capital, and its decrease indicates that workers in a country are getting a declining share of the wealth produced within that country.
Ana Rincon-Aznar, Michela Vecchi, Francesco Venturini
4. Emigration, Employment and Inequality in Post-communist Countries
Abstract
Part of the important debate on migration in the European Union is strictly connected to the increase in its size that occurred in 2004 and 2007, when 10 Formerly Planned Economies of Central and Eastern Europe and the Baltic region entered the EU. Although the Treaty on the Functioning of European Union established for its Member States’ citizens the right to move freely within EU borders, many Western countries feared massive immigration from Eastern Europe and resorted to the Treaty of Accession to impose some temporary restrictions on immigration (Kahanec and Zimmermann, 2009; Kahanec et al., 2014). Public opinion and the political debate that followed these actions led many scholars to concentrate on the effects of migration in the EU-15 receiving countries (EIC, 2009; European Commission, 2010, 2011; Boeri, 2010). In addition to measuring real inflows of migrants, some authors investigated their characteristics and education profiles, paying attention to their return to education or the degree of their satisfaction in the Western EU labour markets (Galgóczi et al., 2012; Bartram, 2013). Bettin (2012) and Huber (2012) found strong evidence of overqualification and of a corresponding underutilisation of EU-10 migrant workers’ skills in the Western EU countries. Of course these aspects are of prominent importance, and question the migration policies established to improve the efficiency of cross-border labour mobility (Galgóczi et al., 2012).
Cristiano Perugini, Fabrizio Pompei
5. Income Mobility in the New EU Member States
Abstract
In this chapter we investigate intragenerational income mobility in Central Eastern European Countries (CEECs) and Baltic Countries (BCs), vis-à-vis Western Europe, in the periods before and during the global crisis. Aspects related to individual income mobility are connected in a dynamic perspective to those of inequality since the movements of economic agents along the income ladder over time shapes income distributions and their changes. In these respects, the two fields of study are highly complementary, with income mobility allowing the identification of the microeconomic drivers of changes in absolute and relative economic positions. Despite the challenges posed by data availability, research on income mobility developed significantly over the past two decades, providing a variety of possible perspectives of analysis, with alternative aggregate indices of mobility reflecting different underlying conceptual and methodological approaches (see Fields, 2007). As regards the microeconomic determinants of income mobility, the literature has primarily emphasised the role of demographic factors such as age and gender of the individuals, and the size and demographic structure of the households (e.g., Shi et al., 2010). Attention has also been paid to physical and human capital endowments, labour market conditions and positions, and initial income levels (e.g., Woolard and Klasen, 2005). More recently, institutional aspects started receiving explicit consideration too, especially with respect to labour market institutional settings (e.g., Ayala and Sastre, 2008; Sologon and O’Donoghue, 2011).
David Aristei, Cristiano Perugini
6. Earnings Inequality and Job Positions across Post-communist European Economies
Abstract
The recent global crisis, with its effects on all EU countries, has re-opened the debate about which economic and governance model can assure sustainability of development dynamics. A first interesting dimension of discussion relates the deep roots of the financial and economic crisis to the changed labour market conditions which occurred in the 1990s, since flexibilisation of working positions and low wages may have contributed to the shaping of new inequalities and the growing recourse to indebtedness, which helped spark off the financial crisis, accelerated its transmission to the real sector and weakened the potential forces for recovery (Stiglitz, 2009; Atkinson et al., 2009; Saez, 2010; Perugini et al., 2015). A second point concerns the wage adjustments that occurred in the aftermath of the global financial crisis as a response to the increasing unemployment. According to the OECD (2014), on the one hand wage moderation plays an important role by slowing down unemployment and favouring economic resilience. On the other, it reduces consumer spending and dampens aggregate demand. Moreover, if the fall in real wages asymmetrically affects different categories of workers, inequality concerns and social cohesion issues add to the overall question of the feeble recovery.
Cristiano Perugini, Fabrizio Pompei
7. Wage Inequality between and within Education Levels in Transition Countries
Abstract
Earnings inequality between education and skill cohorts in Europe has traditionally been one of the main focuses of theoretical and applied research. The skill-biased technical change (SBTC) theory in particular traces the origin of the skill premia for highly educated workers in a race between education and technology — whose winner is a technology that complements higher education and skills (Goldin and Katz, 2008). But relatively little effort has been made to analysing the size of within-group disparities and their drivers. However, especially under certain structural and institutional conditions which may favour income polarisation and the persistence of low-pay traps, this particular dimension of inequality may be relevant.
Cristiano Perugini, Fabrizio Pompei
8. Gender Earnings Inequality in the New EU Member States
Abstract
The emphasis on economic and social equality was a hallmark of the socialist ideology. The countries of Central and Eastern Europe and the Soviet Union were actually able to maintain remarkably equal distributions of income under central planning, and were often identified as the most equal countries in the world (Atkinson and Micklewright, 1992). Yet, notable forms of disparity in living standards — associated with neither monetary flows nor property rights and thus invisible to statistics — certainly existed, and often reflected the position of individuals in the political sphere (Milanovic, 1998). The transition into market-based capitalistic systems entailed a widening of all forms of inequality (Aristei and Perugini, 2012); among them, gender disparities and their evolution played a not inconsiderable role. The crisis that started in 2008 played an additional role in reshaping the gender earnings gap patterns in the region.
Cristiano Perugini, Ekaterina Selezneva
9. Gender Wage Inequality in the Western Balkans
Abstract
This chapter contributes to the body of knowledge on income inequality in the Western Balkans by analysing the scope and characteristics of wage disparities between women and men in Serbia, Macedonia and Montenegro. The analysis is based on the Labour Force Survey (LFS) data for the period 2008–2011 and the Blinder-Oaxaca wage decomposition.
Marko Vladisavljević, Sonja Avlijaš, Sunčica Vujić

Redistributive Preferences and Arrangements

Frontmatter
5. Income Mobility in the New EU Member States
Abstract
In this chapter we investigate intragenerational income mobility in Central Eastern European Countries (CEECs) and Baltic Countries (BCs), vis-à-vis Western Europe, in the periods before and during the global crisis. Aspects related to individual income mobility are connected in a dynamic perspective to those of inequality since the movements of economic agents along the income ladder over time shapes income distributions and their changes. In these respects, the two fields of study are highly complementary, with income mobility allowing the identification of the microeconomic drivers of changes in absolute and relative economic positions. Despite the challenges posed by data availability, research on income mobility developed significantly over the past two decades, providing a variety of possible perspectives of analysis, with alternative aggregate indices of mobility reflecting different underlying conceptual and methodological approaches (see Fields, 2007). As regards the microeconomic determinants of income mobility, the literature has primarily emphasised the role of demographic factors such as age and gender of the individuals, and the size and demographic structure of the households (e.g., Shi et al., 2010). Attention has also been paid to physical and human capital endowments, labour market conditions and positions, and initial income levels (e.g., Woolard and Klasen, 2005). More recently, institutional aspects started receiving explicit consideration too, especially with respect to labour market institutional settings (e.g., Ayala and Sastre, 2008; Sologon and O’Donoghue, 2011).
David Aristei, Cristiano Perugini
6. Earnings Inequality and Job Positions across Post-communist European Economies
Abstract
The recent global crisis, with its effects on all EU countries, has re-opened the debate about which economic and governance model can assure sustainability of development dynamics. A first interesting dimension of discussion relates the deep roots of the financial and economic crisis to the changed labour market conditions which occurred in the 1990s, since flexibilisation of working positions and low wages may have contributed to the shaping of new inequalities and the growing recourse to indebtedness, which helped spark off the financial crisis, accelerated its transmission to the real sector and weakened the potential forces for recovery (Stiglitz, 2009; Atkinson et al., 2009; Saez, 2010; Perugini et al., 2015). A second point concerns the wage adjustments that occurred in the aftermath of the global financial crisis as a response to the increasing unemployment. According to the OECD (2014), on the one hand wage moderation plays an important role by slowing down unemployment and favouring economic resilience. On the other, it reduces consumer spending and dampens aggregate demand. Moreover, if the fall in real wages asymmetrically affects different categories of workers, inequality concerns and social cohesion issues add to the overall question of the feeble recovery.
Cristiano Perugini, Fabrizio Pompei
7. Wage Inequality between and within Education Levels in Transition Countries
Abstract
Earnings inequality between education and skill cohorts in Europe has traditionally been one of the main focuses of theoretical and applied research. The skill-biased technical change (SBTC) theory in particular traces the origin of the skill premia for highly educated workers in a race between education and technology — whose winner is a technology that complements higher education and skills (Goldin and Katz, 2008). But relatively little effort has been made to analysing the size of within-group disparities and their drivers. However, especially under certain structural and institutional conditions which may favour income polarisation and the persistence of low-pay traps, this particular dimension of inequality may be relevant.
Cristiano Perugini, Fabrizio Pompei
8. Gender Earnings Inequality in the New EU Member States
Abstract
The emphasis on economic and social equality was a hallmark of the socialist ideology. The countries of Central and Eastern Europe and the Soviet Union were actually able to maintain remarkably equal distributions of income under central planning, and were often identified as the most equal countries in the world (Atkinson and Micklewright, 1992). Yet, notable forms of disparity in living standards — associated with neither monetary flows nor property rights and thus invisible to statistics — certainly existed, and often reflected the position of individuals in the political sphere (Milanovic, 1998). The transition into market-based capitalistic systems entailed a widening of all forms of inequality (Aristei and Perugini, 2012); among them, gender disparities and their evolution played a not inconsiderable role. The crisis that started in 2008 played an additional role in reshaping the gender earnings gap patterns in the region.
Cristiano Perugini, Ekaterina Selezneva
9. Gender Wage Inequality in the Western Balkans
Abstract
This chapter contributes to the body of knowledge on income inequality in the Western Balkans by analysing the scope and characteristics of wage disparities between women and men in Serbia, Macedonia and Montenegro. The analysis is based on the Labour Force Survey (LFS) data for the period 2008–2011 and the Blinder-Oaxaca wage decomposition.
Marko Vladisavljević, Sonja Avlijaš, Sunčica Vujić
10. The Solidarity Principle in the New EU Member States
Abstract
This chapter aims to assess how the legal traditions of the some new EU Member States (Formerly Planned Economies) impacted on country differences dealing with redistributive aims and approaches. This is primarily done by analysing the provisions that are directly or indirectly related to equity redistribution and solidarity (i.e., access to the health services, social services, taxation systems) included in the constitutional laws. The chapter adopts as its starting conceptual perspective the well-known legal origin theory approach (La Porta et al., 1998), commonly employed to explain how legal traditions reverberate on cross-country institutional differences.
Valentina Colcelli
11. Social Preferences for Redistribution in Central Eastern Europe and in the Baltic Countries
Abstract
An extensive literature has highlighted how aggregate (social) preferences for redistribution are the result of a complex interaction of many forces (Alesina and Giuliano, 2009). First of all, a large number of factors affect individual attitudes towards inequality. They include current income levels (Ravallion and Lokshin, 2000), expectations about future income and social mobility (Benabou and Ok, 2001), education (Isaksson and Lindskog, 2007), age (Corneo and Gruner, 2002), gender (Crozon and Gneezy, 2008), professional and employment status (Alesina and Glaeser, 2004), ideology (Alesina and Fuchs-Schuendeln, 2007), perception of fairness (Benabou and Tirole, 2006), attitude to act in accordance to public values (Corneo and Gruner, 2002), race and ethnic group (Alesina and Glaeser, 2004), personal history (Piketty, 1995), and religious beliefs (Scheve and Stasavage, 2006). In addition, countries differ in terms of collective features affecting attitudes towards inequality, such as the exposition to macroeconomic shocks (Giuliano and Spilimbergo, 2009), cultural norms (Giuliano, 2007) and family models (Alesina and Giuliano, 2007). As economic systems differ strongly in terms both of population composition and of collective features, remarkable crosscountry heterogeneity in aggregate preferences for redistribution is to be expected.
David Aristei, Cristiano Perugini
13. Welfare and Redistribution in Post-communist Countries
Abstract
Welfare states are frequently defined and classified in terms of the breadth of state activity and the breadth of services provided that protect the population from untempered market forces. As set out by Esping-Andersen (1990), and following Polanyi’s interpretation of capitalist development, they express state involvement to make living standards independent of pure market forces (1990, p. 3). Although a logical starting point, this notion can be applied with the same precision neither to state socialist societies nor to all of those emerging from transformations of the 1990s. State provision of distinct services was combined with provision and social protection directly by producing enterprises and with a variety of informal adaptations that continued, or grew, in importance in some countries in the 1990s. This precludes any precise fit with Esping-Andersen’s (1990) three ideal types, built from experience of advanced countries — liberal, corporatist and social democratic — which describe systems with limited and conditional benefits — those with state involvement in provision but still with stratification of social-insurance-based benefits and an assumption of traditional family forms — and systems with universal benefits.
Martin Myant, Jan Drahokoupil

Redistributive Preferences and Arrangements

Frontmatter
10. The Solidarity Principle in the New EU Member States
Abstract
This chapter aims to assess how the legal traditions of the some new EU Member States (Formerly Planned Economies) impacted on country differences dealing with redistributive aims and approaches. This is primarily done by analysing the provisions that are directly or indirectly related to equity redistribution and solidarity (i.e., access to the health services, social services, taxation systems) included in the constitutional laws. The chapter adopts as its starting conceptual perspective the well-known legal origin theory approach (La Porta et al., 1998), commonly employed to explain how legal traditions reverberate on cross-country institutional differences.
Valentina Colcelli
11. Social Preferences for Redistribution in Central Eastern Europe and in the Baltic Countries
Abstract
An extensive literature has highlighted how aggregate (social) preferences for redistribution are the result of a complex interaction of many forces (Alesina and Giuliano, 2009). First of all, a large number of factors affect individual attitudes towards inequality. They include current income levels (Ravallion and Lokshin, 2000), expectations about future income and social mobility (Benabou and Ok, 2001), education (Isaksson and Lindskog, 2007), age (Corneo and Gruner, 2002), gender (Crozon and Gneezy, 2008), professional and employment status (Alesina and Glaeser, 2004), ideology (Alesina and Fuchs-Schuendeln, 2007), perception of fairness (Benabou and Tirole, 2006), attitude to act in accordance to public values (Corneo and Gruner, 2002), race and ethnic group (Alesina and Glaeser, 2004), personal history (Piketty, 1995), and religious beliefs (Scheve and Stasavage, 2006). In addition, countries differ in terms of collective features affecting attitudes towards inequality, such as the exposition to macroeconomic shocks (Giuliano and Spilimbergo, 2009), cultural norms (Giuliano, 2007) and family models (Alesina and Giuliano, 2007). As economic systems differ strongly in terms both of population composition and of collective features, remarkable crosscountry heterogeneity in aggregate preferences for redistribution is to be expected.
David Aristei, Cristiano Perugini
13. Welfare and Redistribution in Post-communist Countries
Abstract
Welfare states are frequently defined and classified in terms of the breadth of state activity and the breadth of services provided that protect the population from untempered market forces. As set out by Esping-Andersen (1990), and following Polanyi’s interpretation of capitalist development, they express state involvement to make living standards independent of pure market forces (1990, p. 3). Although a logical starting point, this notion can be applied with the same precision neither to state socialist societies nor to all of those emerging from transformations of the 1990s. State provision of distinct services was combined with provision and social protection directly by producing enterprises and with a variety of informal adaptations that continued, or grew, in importance in some countries in the 1990s. This precludes any precise fit with Esping-Andersen’s (1990) three ideal types, built from experience of advanced countries — liberal, corporatist and social democratic — which describe systems with limited and conditional benefits — those with state involvement in provision but still with stratification of social-insurance-based benefits and an assumption of traditional family forms — and systems with universal benefits.
Martin Myant, Jan Drahokoupil
Backmatter
Metadaten
Titel
Inequalities During and After Transition in Central and Eastern Europe
herausgegeben von
Cristiano Perugini
Fabrizio Pompei
Copyright-Jahr
2015
Verlag
Palgrave Macmillan UK
Electronic ISBN
978-1-137-46098-1
Print ISBN
978-1-349-56342-5
DOI
https://doi.org/10.1057/9781137460981

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