Income, inequality, and poverty during the transition from planned to market economy

This book is about income, inequality, and poverty during the remarkable period of collapse of Communism and the construction of capitalism in the 18 formerly socialist countries. It covers a period of almost ten years, from the time of the early Gorbachevian reforms of 1987-88 to approximately 1996. The goal of this book is to describe what happened during the transition in the 18 countries. Specifically the book examines what happened to the real incomes of the population, to the inequality with which incomes and expenditures are distributed, and to poverty. It also attempts to find out why these changes occurred. In looking ahead, the book concludes that if growth is to make a substantial dent in poverty relatively quickly, it will be necessary to stabilize income inequality at current levels. Assuming that inequality remains at current levels, and using the average growth rate of 5 percent per capita per year, poverty appears to be staying in these transition economies until well into the twenty-first century. The surveys are of uneven quality. Issues related to limitations of the data are presented at length in Appendix 1.