Emerging Inequalities in Central and Eastern Europe

Market transitions are thought to inevitably produce spiraling inequality on the road to economic growth. This review provides an overview of research evaluating inequality in income and wages in Central and Eastern Europe since 1989. The empirical studies agree that inequality has increased, but disagree about the amount, pace, source, and explanation of change. Patterns of inequality are unrelated to economic performance, to the pace or timing of reform, or to rates of subsequent growth. Inequality increased the most in the least successful countries and the least in those countries with historic cultural connections to the West. Inequalities by age, education, region of the country, and health status increased; differences by gender appear to have declined. Although data are plentiful and promising, it is not yet possible to conclude that patterns of inequality among postcommunist countries are due to the genesis of capitalism, to social and cultural assimilation to the West, to adaptations of redistributive institutions to deal with poverty and unemployment, or to globalization.