Wealth Inequality in Central and Eastern Europe: Evidence From Joined Household Survey and Rich Lists’ Data

Abstract

We study how the problem of the ‘missing rich’, the under-representation of the wealthiest in household surveys, affects wealth inequality estimates for the post-socialist countries of Central and Eastern Europe (CEE). The survey data from the second wave of the Household Finance and Consumption Survey (HFCS) are joined with the data from the national rich lists for Estonia, Hungary, Latvia, Poland and Slovakia. Pareto distribution is fitted to the joined survey and rich lists’ data to impute the missing observations for the largest wealth values. We provide first estimates of the top-corrected wealth inequality for the CEE region in 2013/2014. Despite a short period of wealth accumulation during the post-1989 market economy period, our adjustment procedure reveals that wealth inequality in the Baltic countries is comparable to that of Germany (one of the most wealth unequal countries in Europe), while in Poland and Hungary it has reached levels observed in France or Spain. We discuss possible explanations of these findings with reference to the speed and range of privatization processes, extent of income in-equality, and the role of inheritances and wealth taxes in the region.