Theodore Mitrakos Bank of Greece & Panos Tsakloglou Athens University of Economics and Business & IZA INEQUALITY, POVERY AND WELFARE IN GREECE: FROM THE RESTORATION OF DEMOCRACY TO THE CURRENT ECONOMIC CRISIS Bank of Greece Conference on “Social policies and social cohesion in Greece in light of the current economic crisis” Athens, 13 May 2011

Introduction Distributional issues almost always in the centre of Greek public discourse. In recent years, many empirical investigations However, many assertions made in the public discourse, not substantiated, sometimes contradictory and/or not supported by the findings of empirical studies –Greek society characterized by acute class differences / Greek society dominated by middle classes –The poor are getting poorer and the rich are getting richer –The “new poor” Objective of the paper: To provide a detailed picture of structure and inter-temporal trends in inequality and poverty until the current crisis, using all available HBSs

Data Household Budget Surveys (HBSs): Provide detail information on consumption expenditures, disposable income, socio-demographic characteristics of the population, material conditions of living, etc. Only seven with national coverage: 1974, 1982, 1988, 1994, 1999, 2004 and 2008 Large sample; Quality of the data Consumption of own production (incl. imputed rent) Results using both distributions (consumption expenditure, income). Usually, not different Comparisons with ECHP / EU-SILC

Methodology Distributions of persons Equivalence scales Inequality indices: Gini, Atkinson ( ε =0.5 & ε =2.0) Decomposition MLD (+ Theil + Varlog) Poverty indices: Poverty Rate, Poverty Gap, FGT2 Welfare indicator: w= μ(1-I)

Decile shares Consumption Expenditure Income

Inequality changes in decile shares Consumption Expenditure Income

Lorenz curves Consumption Expenditure Income

Lorenz dominance and Lorenz curve differences Consumption Expenditure Income

Inter-temporal trends in inequality indices (HBSs) Consumption Expenditure Income

Inter-temporal trends in inequality Gini Index, (HBSs and ECHP / EU-SILC) Distribution of disposable income

Structure of inequality Share of “Between groups” component, Mean Log Deviation Distribution of consumption expenditure

Trend decomposition of inequality ( )

Inter-temporal trends in poverty indices (HBSs) – relative poverty lines Consumption Expenditure Income

Inter-temporal trends in poverty indices (HBSs) – fixed (1999) poverty line Consumption Expenditure Income

Inter-temporal trends in relative poverty Poverty rate, (HBSs and ECHP / EU-SILC) Distribution of disposable income

Poverty risk groups (consumption expenditure, FGT2)

Contribution to aggregate poverty (consumption expenditure, FGT2, )

Logit estimates of poverty risk (odds ratios, consumption expenditure)

Trend decomposition of poverty (, FGT2, )

Inter-temporal trends in welfare indices (HBSs) Consumption Expenditure Income

International comparisons: Inequality

International comparisons: poverty

Qualifications Population groups under-represented in the HBS samples (homeless, institutionalized, immigrants) Changes in indirect taxes (only consumption expenditure) No inclusion of capital gains (only income) No inclusion of public transfers in-kind (education, health care, etc)

Qualifications Population groups under-represented in the HBS samples (homeless, institutionalized, immigrants) Changes in indirect taxes (only consumption expenditure) No inclusion of capital gains (only income) No inclusion of public transfers in-kind (education, health care, etc)

Conclusions Inter-temporal trends –Inequality –Poverty (in relative terms) –Poverty (in absolute terms) –Welfare Structure of inequality Poverty risk groups Structure of poverty International comparisons Rather “positive” results And, then, the crisis arrived!