Consumption and Income Inequality in Poland During the Economic Transition

Abstract

This paper challenges the conventional wisdom that income inequality in Poland increased substantially following the economic transition in 1989-90.The results, based on micro data from the 1985-92 Household Budget Surveys, indicate that overall income inequality increased during the initial stages of the transition but then declined to pre-transition levels.Consumption distributions reveal a similar pattern.However, earnings inequality did increase markedly after the transition and the relative well-being of different soCio-economic groups was altered.Absolute poverty levels increased during the transition, but this increase is attributable to declines in mean income and consumption rather than to changes in inequality.