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Social Transfers and Income Inequality in Bulgaria

Author

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  • Mihaylova Svilena

    (Assistant Professor, Department of Economics, University of Economics – Varna)

  • Bratoeva-Manoleva Silviya

    (Assistant Professor, Department of Economics, University of Economics – Varna)

Abstract

The paper analyzes the distributional effects of social transfers in Bulgaria in the period 2000-2014, using income inequality decomposition by factor components. The results suggest that social transfers mitigate income inequality, but this effect varies depending on the type of transfer. Pensions exert the strongest influence due to their significant share in total income, which also rises over time. Family allowances are pro-poor in nature, but because of their small share in beneficiaries’ total income, their impact on overall inequality is much weaker. “Other social benefits” have the weakest inequality-reducing effect, which is due to their higher concentration towards the richest decile and increasing share in total income. Despite the inequality-decreasing impact of social transfers, we argue that they should not be regarded as the sole remedy for the sharp income disparities in the country, but need to be accompanied by relevant active labor market policies.

Suggested Citation

  • Mihaylova Svilena & Bratoeva-Manoleva Silviya, 2017. "Social Transfers and Income Inequality in Bulgaria," South East European Journal of Economics and Business, Sciendo, vol. 12(1), pages 38-49, April.
    • Handle: RePEc:vrs:seejeb:v:12:y:2017:i:1:p:38-49:n:3
    DOI: 10.1515/jeb-2017-0003
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    Cited by:

    1. Petar Peshev & Kristina Stefanova & Ivan Bozhikin & Radostina Stamenova & Ivanina Mancheva, 2022. "Is income inequality in Bulgaria underestimated in survey data?," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 3, pages 301-326.
    2. Svilena Mihaylova, 2023. "Wage Inequality in Bulgaria: Decomposition by Economic Sectors, Occupational Groups and Districts," Bulgarian Economic Papers bep-2023-05, Faculty of Economics and Business Administration, Sofia University St Kliment Ohridski - Bulgaria // Center for Economic Theories and Policies at Sofia University St Kliment Ohridski, revised Sep 2023.
    3. Stoyan Tanchev, 2021. "How the proportional income taxation increases inequality in Bulgaria," Journal of Tax Reform, Graduate School of Economics and Management, Ural Federal University, vol. 7(3), pages 244-254.

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    More about this item

    Keywords

    social transfers; income inequality; redistribution;
    All these keywords.

    JEL classification:

    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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