Did Inequality Increase in Transition?: An Analysis of the Transition Countries of Eastern Europe and Central Asia

In the first decade that the former socialist countries of Eastern Europe and Central Asia transitioned toward freer markets, measured income inequality increased. Because this contradicted previous models of inequality, researchers linked the increase in inequality to a supposed equality under socialism and to the process of economic and political liberalization. We show, however, that other factors, including hidden inequalities in the socialist era, can explain democratization's resultant increase in measured income inequality.