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Economic transition and the distributions of income and wealth, Volume 1
 
Author:Ferreira, Francisco H. G.; Collection Title:Policy, Research working paper ; no. WPS 1808
Date Stored:2000/02/24Document Date:1997/08/31
Document Type:Policy Research Working PaperSubTopics:Environmental Economics & Policies; Economic Theory & Research; Banks & Banking Reform; Inequality; Labor Policies; Health Economics & Finance; Fiscal & Monetary Policy
Language:EnglishMajor Sector:Public Administration, Law, and Justice
Report Number:WPS1808Sub Sectors:Other Public Sector Management
Volume No:1  

Summary: Using a model of wealth distribution dynamics and occupational choice, the author investigates the distributional consequences of policies and developments associated with the transition from central planning to a market system. The model suggests that even an efficient privatization designed to be egalitarian may lead to increases in inequality (and possibly poverty), both during the transition and in the new steady state. Creating new markets in services that are also supplied by the public sector may also contribute to an increase in inequality. So can labor market reforms that lead to a decompression of the earnings structure and to greater flexibility in employment. The results underline the importance of retaining government provision of basic public goods and services, removing barriers that prevent the participation of the poor in the new private sector, and ensuring that suitable safety nets are in place.

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