National policies shaping income inequality in transition economies: the cases of the Czech and Slovak Republics and the Baltic States

Abstract

The thesis aims to investigate the influence of national policies on income distribution patterns in the countries that share similar historical legacies. The focus is on the postcommunist countries that went through transition process. Moving from central planned to market economy inevitably lead to the rise of income inequality, although the countries experienced it to different extent: some managed to maintain income inequality at a low level, while others relatively failed to provide the social safety net for their citizens. The study is based on the analysis of a large number of statistical sources concerning the data on two selected group of countries – the Czech and Slovak Republics and the Baltic States – from 1985, when first processes of economy liberalisation started, to 2014, which marks the countries’ ten years anniversary within the European Union. The former group represents one of the most successful countries on the European continent in terms of mitigating income inequality, while the latter one has the highest income inequality levels in the European Union. When controlling for significant macroeconomic and demographic indicators, such as the level of urbanisation and adjusted wage share, the thesis explicitly elaborates on the role of governmental policies of the countries of interest from their independence until 2014. Policies such as privatisation, taxation, and cash benefits distribution turned out to have big influence on income inequality level in a long term.