Household Welfare Change during the Transition in Poland
Ref. no. 681-21
The welfare effects of distributional changes brought about by the transition to a market-based system are among the best-established stylized facts on the Eastern European economies undergoing reform. Between 1989 and 1993 the Gini coefficient in Poland increased by 5 percent, and almost all Polish families experienced declines in real income after 1989. This research project investigates the effect of human capital on changes in the distribution of income and consumption, and the determinants of changes in families' well-being, focusing on the options and choices of Polish households. It pays particular attention to redistributive policies, especially social expenditures.
Changes in income and consumption during the transition period are estimated at selected points in time, to characterize the evolution of the socioeconomic conditions of Polish households. The effect of human capital is analyzed by comparing the results of regressions of households' income and consumption on a set of household characteristics (including education levels). Households' utilization of their human capital and other assets is explored by regressing the year-to-year change in household expenditure on a set of explanatory variables, such as household characteristics; ownership of land, housing, and durable goods; income composition; and changes in income composition.
The project uses two sets of data from the Polish Household Budget Survey, obtained from the Central Statistical Office. The first set of data contains three two-year (overlapping) panels: 198990, 199091, and 199192. The second set of data covers two two-year panels, 199394 and 199495, and a three-year panel, 199395. The two data sets differ in that the first excludes private sector workers, while the second includes these workers as well as self-employed workers and those living on social benefits.
The results of the research should assist policymakers in identifying those most likely--and those least likely--to be hurt by the reform, facilitating the design and implementation of targeted programs.
Responsibility: Policy Research Department, Poverty and Human Resources Division--Emmanuel Jimenez (ejimenez@worldbank.org). With Wladimir Okrasa and the Central Statistical Office, Poland.
Completion date: July 1998.
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