Inequality, Transfers and Growth: New Evidence From the Economic Transition in Poland

June 1, 2000

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Eswar S Prasad, and Michael P. Keane Inequality, Transfers and Growth: New Evidence From the Economic Transition in Poland, (USA: International Monetary Fund, 2000) accessed December 22, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper challenges the conventional wisdom that inequality in Poland increased markedly during the economic transition. Income and consumption inequality actually declined in 1990-92 and rose only moderately above pre-transition levels by 1997. However, inequality in labor earnings increased markedly and consistently during 1990-97. Social transfer mechanisms, including pensions, helped mitigate increases in overall inequality and poverty. More importantly, these transfer mechanisms were well-designed to reduce political resistance to market-oriented reforms in the early years of transition, paving the way for rapid growth. Cross-country evidence from transition economies is consistent with this interpretation and with recent literature suggesting that inequality-reducing redistribution can enhance growth.

Subject: Consumption, Income, Income distribution, Income inequality, Labor, National accounts, Wages

Keywords: Adj. income, Consumption, Consumption inequality, Eastern Europe, Household income, Income, Income distribution, Income inequality, Income net, Income residual, Kernel density, Poverty lines, Revenue item, Wages, WP

Publication Details

Pages:

52
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2000/117
Stock No:

WPIEA1172000
ISBN:

9781451854008
ISSN:

1018-5941

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