Inequality of opportunity in Central and Eastern Europe: accounting for changes over time

We study changes in income inequality and inequality of opportunity (IO) in seven Central and Eastern European (CEE) countries. Using EU SILC 2005 and 2011 data, we make a first attempt to apply inequality decompositions based on RIF regression to the problem of changes in IO over time. Our results indicate that there is considerable heterogeneity in levels of inequality and in the evolution of inequality over time in CEE countries, linked to both changes in the parental backgrounds of individuals and the effects of these changes on current incomes, and to micro-economic factors that correspond to the labour market status and educational attainment levels of households. Differentiating between the CEE countries, we provide evidence of a strong decrease in both overall income inequality and absolute IO in Poland; a decrease in absolute IO accompanied by modest changes in income distribution in Lithuania; and a relatively high and growing share of “unfair” inequality accompanied by a low levels of overall income dispersion in Hungary.