Factors that account for the wealth inequality differences between post-socialist countries

Abstract

In general, there are significant cross-country differences in wealth inequality. Recent research has documented that household socio-economic characteristics do not explain these differences across advanced economies. Thus, this study is the first to examine the determinants of such disparities in wealth inequality between five post-socialist emerging markets of Central and Eastern Europe (CEE). Based on the findings, the differences in homeownership rates accounted for up to 42% of the cross-country disparities in wealth inequality (when measured with the Gini index) and for as much as 63%–109% of wealth inequalities in the bottom part of the distribution. However, our results are not sensitive to the significant underestimation of top wealth values observed in household survey data. We argue that the differences in homeownership rates among the CEE countries are related, among others, to varying government support for mortgage loans before the global financial crisis (2003–2007) and the degree of government help for indebted households after the crisis.