Top incomes in Croatia and Slovenia, from 1960s until today

The income tax data are used to show that the transition to the market economy has led to a moderate increase in income inequality in Croatia and Slovenia. Inequality increased in the 1990s and stabilized afterwards, with the increase in inequality being mainly driven by the rising shares of top income groups. This development is explained by the ‘gradualist' transition course. In both Slovenia and Croatia, the slow privatization and the large public sector have contributed to the emergence of labour market institutions that procured low inequality social equilibrium. Further, the substantial importance of the state ownership of the corporate sector in Slovenia and the foreign and state ownership in Croatia has made the concentration of private capital income less pronounced at the top of the income distribution. Finally, new inequality series for Croatia and Slovenia are a valuable contribution in assessing the role and showing the importance of policies and institutions in shaping inequality.