ECONOMIC INEQUALITY IN CROATIA IN 1998: LOWER THAN EXPECTED

This paper challenges a widespread belief that income inequality in Croatia is significantly higher than generally observed in transition and market economies, and its results based on micro-data from the 1998 Household Budget Survey indicate no substantial departure from the average for other countries in transition. The decomposition of inequality reveals that education and labor force participation are the most important factors behind disparities in income and consumption. On the other hand, gender or age of a household head, settlement and household types seem to predict inequality rather poorly. Non-farm self-employment income is highly concentrated and accounts for more than one fifth of overall income inequality whereas pensions tend to be more equally distributed. Social assistance is generally well-targeted towards the poor and contributes negatively to the overall inequality