Income inequality in Croatia
The income distribution in Croatia considers the distribution of income in Croatia. In particular, the personal income distribution describes how the income of an economy is distributed among individuals or groups (e.g. private households ).
When interpreting statistical data, the different uses of the term income must be taken into account, because a distinction must be made between gross income , income , taxable income and net income or disposable income .
The Gini coefficient for Croatia was 0.304 in 2015, which means that income is distributed more equally in a world-wide comparison. The ratio of income in the top 20 percent to those in the bottom 20 percent is 5. 21.4% of the Croatian population are at risk of poverty and 26.4% are at risk of social exclusion.
Methods of representation
Differences in type of income
The type and aggregation of income play a decisive role in the interpretation and comparability of the indicators. There are basically two types of income. The income that comes about through dependent and self-employed work, which is referred to as market income or primary income, and the income after state transfers, which is referred to as secondary income.
The primary income arises from the market process and is made up of income from employment, business activity, rental, capital before taxes and duties. The consideration of social contributions, direct taxes as well as public (e.g. social assistance , unemployment benefits ) and private (e.g. maintenance ) transfers is called secondary income distribution .
Inequality & Poverty Indicators
From 2010 to 2017, income inequality in Croatia decreased. The Gini coefficient fell from 31.6% to 29.9% and the S80 / S20 ratio or the ratio of income in the top 20 percent to those in the bottom 20 percent also fell from 5.5 to 5.0 .
| indicator | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 |
|---|---|---|---|---|---|---|---|---|
| Gini coefficient | 0.316 | 0.312 | 0.390 | 0.390 | 0.302 | 0.304 | 0.298 | 0.299 |
| S80 / S20 income ratio | 5.5 | 5.6 | 5.4 | 5.3 | 5.1 | 5.2 | 5.0 | 5.0 |
| of poverty or social exclusion
threatened persons (in%) |
31.1 | 32.6 | 32.6 | 29.9 | 29.3 | 29.1 | 27.9 | 26.4 |
| At-risk-of-poverty rate (in%) | 19.6 | 21.1 | 23.3 | 21.8 | 21.1 | 20.9 | 20.4 | 21.4 |
However, two of the most important indicators of poverty experienced contrasting developments. The number of people at risk of social exclusion or poverty fell from 31.1% of the population in 2010 to 26.4% in 2017. However, the at-risk-of-poverty rate rose from 19.6% to 21.4% over the same period. In 2015, income was distributed among the population as follows:
| Indicator (2015) | % |
|---|---|
| Income share of the first quintile | 7.3% |
| Income share of the second quintile | 13.1% |
| Third quintile share of income | 17.9% |
| Income share of the fourth quintile | 23.5% |
| Income share of the fifth quintile | 38.1% |
| Proportion of poverty ($ 5.5 / day level in PPP) | 5.8% |
| Proportion of poverty ($ 2 / day level in PPP) | 2.24% |
| Relative poverty gap ($ 2 / day level in PPP) | 0.86% |
| Relative poverty gap ($ 1.25 / day level in PPP) | 0.40% |
The lowest income quota earned 7.3% of Croatia's disposable income in 2015, while the fifth quota accounted for 38.1% of income. The proportion of poverty in the same year was 2.24% at the US $ 2 per day level and 5.80% at the US $ 5.5 per day level (measured in purchasing power parity ). The relative poverty gaps are 0.40% at the US $ 1.25 (PPP) / day level and 0.86% for US $ 2 (PPP) / day.
Development of personal income distribution
Historical development
The study of inequality in the distribution of income between households and individuals in Croatian economic literature is relatively weak. In the socialist era, the reasons for this can be traced back to the embarrassment of the topic of the then established political-economic circles. The focus was more on the distribution of income between industries and groups. The analysis of the distribution of the well-being of the population was limited to individual scientific contributions.
In the former Yugoslavia, a household consumption survey was carried out every five years, which could be used to analyze inequality at the level of the republic including Croatia. These were collected in 1973, 1978, 1983 and 1988. When a new survey was commissioned for Croatia in 1998, there were no reliable data on the basis of which the distribution of individual incomes could be assessed. From 1998 onwards an attempt was made to collect data on inequality and poverty in Croatia as part of a household survey by the World Bank. However, due to the war in Yugoslavia , these did not include the entire Croatian population and were therefore not representative, as the areas more severely affected by the war were underrepresented and, as a result, the inequality was greatly underestimated.
Estimates of inequality in other transition countries in the late 1980s by the World Bank show the approximate magnitude of the Gini coefficient of 0.19 for almost all Eastern European countries with the exception of Poland with a Gini coefficient of 0.24 and Russia with 0.26. The database by Deininger and Squire (1996) provides similar data with an estimated Gini coefficient for Poland in the late 1980s of 0.254 and for the Soviet Union of 0.278. Nestic's estimates of the Gini coefficient for Croatia in 1988 of 0.29 appear reasonable when compared to other countries in the region. This was explained at the time due to the more marketable elements of the Croatian economy and greater liberalization towards the other socialist economies.
| Survey year | Gini index | Theil index | Atkinson index (ε = 0.5) | Atkinson index (ε = 0.5) |
|---|---|---|---|---|
| 1973 | 0.300 | 0.151 | 0.072 | 0.140 |
| 1978 | 0.294 | 0.137 | 0.070 | 0.137 |
| 1983 | 0.271 | 0.144 | 0.062 | 0.119 |
| 1988 | 0.286 | 0.150 | 0.069 | 0.129 |
| 1998 | 0.297 | 0.157 | 0.073 | 0.137 |
Development since the transition
After the collapse of the Soviet Union and during the war in Yugoslavia in the early 1990s, the former Eastern Bloc countries went through a transition from (partly centrally planned) socialist economies to market economies. This liberalization process has resulted in an increase in income inequality. The average Gini development of the transition economies shows an increase from 0.26 (1989) to approximately 0.35 at the end of the 1990s. The income inequality of the successor states of the USSR and the Commonwealth of Independent States started from almost the same starting level in 1989, but rose much more rapidly and reached its peak in 1996 with a Gini coefficient of 0.43. In contrast, income inequality in Croatia was relatively stable between levels of 0.28 and 0.30. These inequality values are slightly higher than in the CEEC-5 , but below those of the EU-25 or the average of the transition countries.
In the mid-1990s, there were institutional upheavals on the labor market in Croatia. The first national collective agreement was signed in 1992 and a new labor law was introduced in 1995. In 2003 the state lost its monopoly in job placement and further liberalization measures were introduced. The wage share and income inequality in Croatia show a negative relationship. The higher the share of wage income in GDP, the lower the Gini coefficient. From this it can be concluded that the above-average wage share has contributed to the relatively stable development of income inequality. There is also a negative correlation between the density of collective agreements and the Gini coefficient in transition countries including Croatia. A similar negative correlation can be found between union density and income inequality in the former socialist countries.
In addition to the tax and labor market policy, the level and quality of education of the population is a decisive reason for the inequality in Croatia. The educational system in Croatia is given poor grades due to the below-average qualifications at all levels.
See also
bibliography
- R. Crkvenčić: Analiza Ekonomske Nejednakosti u Hrvatskoj. Diplomski Rad, No. 200 / PE /, 2002. Sveučilište Sjever Sveučilišni Centar Varaždin.
- Klaus Deininger and Lyn Squire: A New Data Set Measuring Income Inequality. In: The World Bank Economic Review. Volume 10, No. 3, 1996, pp. 565-591.
- I. Grgurev and I. Vukorepa: Flexible and New Forms of Employment in Croatia and their Pension Entitlement Aspects. In: Transnational, European, and National Labor Relations. Springer, Cham, 2018, pp. 241–262.
- SD Hoffman, I. Bićanić and O. Vukoja: Wage inequality and the labor market impact of economic transformation: Croatia, 1970–2008. In: Economic Systems. Volume 36, No. 2, 2012, pp. 206-217.
- M. Holzner and S. Leitner: Inequality in Croatia in Comparison (No. 355). The Vienna Institute for International Economic Studies, wiiw, 2009.
- D. Nestić: Ekonomske nejednakosti u Hrvatskoj 1973–1998. In: Financijskateorija i praksa. Volume 26, No. 3, 2002, pp. 595-613
- D. Nestić: Ekonomska nejednakost u Hrvatskoj 1998. manja od očekivanja. In: Ekonomski pregled. Volume 53, 11-12, 2002, pp 1109-1150
- A. Poprzenovic: Remittances and Income Inequality in Croatia. 2007
- N. Karaman Aksentijević, N. Denona Bogović and Z. Ježić: Education, poverty and income inequality in the Republic of Croatia. In: Zbornik radova Ekonomskog fakulteta u Rijeci: časopis za ekonomsku teoriju i praksu. Volume 24, No. 1, 2006, pp. 19-37.
Individual evidence
- ↑ a b Eurostat - Tables, Graphs and Maps Interface (TGM) table. Retrieved January 19, 2019 .
- ↑ a b Eurostat: S80 / S20 income quintile ratio by gender. Retrieved January 19, 2019 .
- ↑ a b Eurostat: At- risk-of-poverty rate by social benefits by detailed age group - EU-SILC survey. Retrieved January 19, 2019 .
- ↑ a b Eurostat - Tables, Graphs and Maps Interface (TGM) table. Retrieved January 19, 2019 .
- ↑ Croatia Income Share Held By Highest 10percent. Retrieved January 19, 2019 .
- ↑ a b c D. Nestić: Ekonomske nejednakosti u Hrvatskoj 1973-1998. In: Financijskateorija i praksa . tape 26 , no. 3 , 2002, p. 595-613 .
- ↑ D. Nestić: Ekonomska nejednakost u Hrvatskoj 1998. manja od očekivanja, Ekonomski pregled . tape 53 , no. 11-12 , 2002, pp. 1109-1150 .
- ↑ R. Crkvenčić: Analiza ekonomske nejednakosti u Hrvatskoj (... Doctoral dissertation, University North University center Varaždin Department of Business Economics). 2018.
- ^ Margaret [editor] * Glewwe Grosh: Volume Two . No. 20731 . The World Bank, May 31, 2000, pp. 1 ( worldbank.org [accessed January 19, 2019]).
- ^ Klaus Deininger and Lyn Squire: A New Data Set Measuring Income Inequality . In: The World Bank Economic Review . tape 10 , no. 3 , 1996, p. 565-591 .
- ↑ a b c d M. Holzner and S. Leitner: Inequality in Croatia in Comparison . In: The Vienna Institute for International Economic Studies .
- ^ Saul D. Hoffman, Ivo Bićanić, Oriana Vukoja: Wage inequality and the labor market impact of economic transformation: Croatia, 1970–2008 . In: Economic Systems . tape 36 , no. 2 , June 2012, ISSN 0939-3625 , p. 206-217 , doi : 10.1016 / j.ecosys.2011.08.002 .
- ↑ N. Karaman Aksentijević, N. Denona Bogović and Z. Ježić: Education, poverty and income inequality in the Republic of Croatia. Zbornik radova Ekonomskog fakulteta u Rijeci: časopis za ekonomsku teoriju i praksu . tape 24 , no. 1 , p. 19-37 .