The Impact of Economic Development in the Czech Republic on the Income Inequality between Groups of Households

AbstractFrom the results of existing conducted and published analyses of the income situation of households, some unanswered questions have emerged about whether the economic development has influenced all income groups of households by the same measure. The period observation spans 2005–2012, representing a period of economic growth, crisis and stagnation and is expressed as GDP per capita. To depict the situation of households as the main variable, the total gross income as reported in the primary survey Statistics on Income and Living Conditions of the European Union (EU SILC) has been used. The paper uses these empirical data and through mathematical functions describes the evolution of the household income situation. Similarly, an empirical investigation of total household expenditure for each commodity according to COICOP describes how the level of household spending has trended. The parameters of the selected functions allow us to analyse the nature of changes in both variables during the observed period of time. The paper aims to answer whether the function that best describes the trending of incomes and expenditures of households and the growing annual increases in the gap in both observed variables (resembling an open pair of scissors), can be used to describe the movement of both variables for different groups of households by quintile classification with an emphasis on households at risk of poverty. Different economic trends manifest themselves in different ways for selected groups of households and negatively affect income inequality