Determinants of inequality in transition countries

Abstract

Income inequality in Eastern Europe has grown significantly more since the collapse of socialism than previously thought—as found in recent research supplementing household survey data with information from fiscal sources and national accounts. Currently, income inequality in ex-communist countries is, on average, higher than in the rest of Europe. Eastern European governments should thus enact reforms to increase income redistribution, such as more progressive income taxation and employment-conditional low-wage subsidies. Wealth or inheritance taxes should be considered in the Baltic countries as they are among the most wealth-unequal states in Europe. ELEVATOR PITCH