The Impact of Social Transfers in Central and Eastern Europe

This paper analyses the impact of social transfers in seven Central and Eastern European countries using 16 datasets provided by the Luxembourg Income Study (Czech Republic 1992, 1996; Estonia 2000; Hungary 1991, 1994, 1999; Poland 1986, 1992, 1995, 1999; Romania 1995, 1997, Slovakia 1992, 1996; Slovenia 1997, 1999). The principal objective is (a) to provide an overview of the development of social inequality in Central and Eastern Europe; and (b) to quantify the change of poverty rates among the total population and among targeted groups (unemployment compensation, means-tested and family benefits beneficiaries) before and after transfers. The results of this paper show that although the access to these benefits is no guarantee for leaving poverty, social transfers significantly improve the economic conditions of families in need. Without the existence of these types of provisions, Central and Eastern European societies would not only be more unequal societies, but would be also more atomised and disaggregated societies. In the long run, this might seriously damage further reforms or the democratisation process itself

Deindustrialization and the Polarization of Household Incomes: The Example of Urban Agglomerations in Germany

The tertiarization, or perhaps more accurately, the deindustrialization of the economy has left deep scars on cities. It is evident not only in the industrial wastelands and empty factory buildings scattered throughout the urban landscape, but also in the income and social structures of cities. Industrialization, collective wage setting and the welfare state led to a stark reduction in income differences over the course of the twentieth century. Conversely, deindustrialization and the shift to tertiary sectors could result in increasing wage differentiation. Moreover, numerous studies on global cities, the dual city, and divided cities have also identified income polarization as a central phenomenon in the development of major cities. Using data from the German Socio-Economic Panel (SOEP), we find an increasing polarization of household income structures since the mid-1990. In agglomerations, this income polarization is even more pronounced than in the more rural regions. The income polarization in Germany is likely to have multiple causes, some of which are directly linked to policies such as the deregulation of the labor market. But extensive deindustrialization is probably also one of the drivers, that has led directly to the weakening of middle income groups