ECONOMIC NEQUALITY IN CROATIA IN 1998 LOWER THAN EXPECTED

This paper challenges widespread belief, as well as the results of World Bank study, that income inequality in Croatia is significantly higher than generally observed in transition and market economies. The results, based on micro-data from the Household BudgetSurvey for 1998, indicate no substantial departure from the average for transition countries. The decomposition of inequality reveals that education is the main factor explaining income and consumption differences. Labor force participation is an important factor aswell. Sex or ages of household head, urban/rural type of settlement and household type are rather poor predictors of inequality. Non-farm self-employment income is highly concentrated and accounts for more then one fifths of all income inequality. Pensions are more equally distributed, whereas social assistance is generally well targeted towards the poor and contributes negatively to overall inequality.