Abstract
Income polarization adds to the literature on income distribution by providing information on the poles of the distribution of income, but little is known about this issue in Europe. This article explores income polarization and its determinants for twenty European countries over the period 2004–13 based on EU-SILC microdata and Shapley decomposition. The results suggest that income polarization is rather low in Europe; it rose in West-EU15 countries during 2004–08, but declined afterwards. The opposite development is witnessed for Central and Eastern European new member states. Moreover, in most cases, market income induced higher polarization, while tax-benefit systems were polarization-reducing.
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