Proceedings of The 7th International Conference on Research in Business, Management and Economics
Year: 2023
DOI: https://www.doi.org/10.33422/7th.icrbme.2023.07.105
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Income Inequality in Bulgaria
Prof. Dr. Julia Dobreva
ABSTRACT:
Income inequality in Bulgaria has been going through a process of dynamic changes in the last 30 years as a result of the socio-economic development of the country. Bulgaria has made a difficult but successful transition from planned to open market modern economy since 1990. However, certain institutional mechanisms such as the flat tax rate, have also contributed to the unequal distribution of income and wealth and have led to income inequality today. This paper identifies the main trends in inequality (measured trough the Gini index and income polarization) and some of the main factors, which have led to income inequality in Bulgaria in the last 30 years. The factors include inefficient educational system, high dependency on social transfers, unemployed and aging population, the unequal distribution of labor force in the regions and uneven distribution of investments, the flat tax rate and low skilled labor. All of them have been contributing to inequality in a very unstable macroeconomic environment shaped by the global financial and economic crisis 2007-2009 and the COVID-19 crisis in 2020-2021 and its economic aftermaths, including increasing inflation since the end of 2022. The analysis highlights that the polarization of income of the richest 20% and the poorest 20% of the population in Bulgaria is very high, while only 10 years earlier it has been equal to the average EU levels. The paper also recommends measures to be applied in order to reduce income inequality in the next decade and achieve social sustainability.
keywords: poverty; inequality; Gini; sustainability; income