Rise in income inequality after the fall of Communism


Communism advocates for a society free of class division by money, in effect a state with low income inequality. The fall of Eastern European Communism in the late 1980s and early 1990s provides an opportunity to study the effect of conversion from Communism to Capitalism on income inequality. The Gini coefficient is an annual measure of income inequality and ranges from 0 (complete equality) to 100 (full inequality). This analysis focuses on four former Eastern Bloc countries whose borders were not altered in the ensuing years.


Of the nine Eastern European countries that were ostensibly Communist in the second half of the 20th century, seven were still united by the Warsaw Pact when the Berlin Wall fell in 1989. Four of them—Bulgaria, Hungary, Poland, and Romania—remained intact into the 21st century and are therefore appropriate for this study. The dissolution of the USSR and Czechoslovakia into their constituent states and the reunification of East Germany with West Germany impede the analysis of these three former Eastern Bloc countries.

Data were retrieved in September 2017 from the UNU-WIDER World Income Inequality Database (WIID3.4) filtered for Source=Transmonee 2004 and Welfaredefn=Income, net. To emphasize shape over score, data for each country are internally scaled from low to high. Data are not available for Bulgaria in 1989–1991 & 2001–2002 or Hungary in 1990 & 1992.

Visualization by Julian H. Lange, December 2017