Abstract

The problem of income inequality is globally relevant, receiving the attention of both scientists and pol- iticians. Lithuania as a small country has made significant progress in approaching the standard of liv- ing in Western Europe. However, there are still differences in economic growth between separate popula- tion groups. Thus, the problem of income inequality remains very acute. Currently, researchers are widely discussing the risk of income inequality to the country’s society by analysing its causes and proposing var- ious solutions. Although scientific debates address income inequality across regions, such studies are often limited to examples of large countries. Meanwhile, there is a lack of studies on regional income inequality in small countries, so the question of whether a small country is characterised by regional income inequal- ity remains open. This research aims to examine the level of regional income inequality in Lithuania. We hy- pothesised that Lithuania has a high level of regional income inequality and this is one of the causes of the high income inequality in the whole country. To estimate regional income inequality, we used the most com- mon measures: Gini coefficient, decile ratio, and the coefficient of variation. The analysis was performed at level 3 of the Nomenclature of Territorial Units for Statistics (NUTS), according to which Lithuania is divided into 10 administrative counties. For this research, we chose the indicators illustrating income per capita on various levels, i.e., gross domestic product (GDP) per capita, average disposable household income per cap- ita, and gross hourly wages, as the various types of income can be used. For the estimation of GDP per cap- ita and average disposable household income, we analysed the data provided by the Lithuanian Department of Statistics (Statistics Lithuania) for 2014–2017. Due to a lack of data to estimate gross hourly wages, we examined the statistical data from the Lithuanian Department of Statistics for 2014. The results show that the hypothesis has not been confirmed. According to the research results, there is a small distribution of in- come between different regions of a small economy, although the level of economic development of different regions differs. The study findings are important not only from an academic perspective for identifying the causes of income inequality and raising questions for further research, but also for regional economic policy makers. The obtained results show that decisions related to a more equal distribution of income in Lithuania as a small country are determined not only by the specificity of its regions but also by the general trends of the country.

Highlights

  • Income inequality, as shown by various researchers and practitioners, makes a significant contribution to people’s quality of life and the overall socio-economic development of the country

  • We considered Lithuanian regions classified by the level 3 of the Nomenclature of Territorial Units for Statistics (NUTS), according to which Lithuania is divided into 10 administrative counties: Alytus, Kaunas, Klaipeda, Marijampole, Panevezys, Siauliai, Taurage, Telsiai, Utena, and Vilnius

  • gross domestic product (GDP) per capita is an important indicator, which helps estimate the level of economic development

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Summary

Introduction

As shown by various researchers and practitioners, makes a significant contribution to people’s quality of life and the overall socio-economic development of the country. High income inequality is generally associated with the shadow economy, higher criminality, higher social exclusion and other unwanted phenomena. Income inequality in transition economies was analysed by numerous researchers [1, 2, 3, 4, 5]. As Malkina [4] stated, the uneven economic and social development of country’s regions results in regional income inequality. Vasilyeva [5] revealed similar findings She found that regional uneven economic and social development has a major impact on the quality of life and income inequality

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