This thesis is an empirical investigation of the relationship between income inequality and redistribution and their impact on the poorest segment of population. It is examined by two models in which we use transformed Gini coefficient as a measure of income inequality and sharegain (difference between disposable and factor income share of given decile) as a measure of redistribution. Relationships are tested on a sample consisting of 24 European countries in the period 1990 -2005. This sample is deeply analyzed with special emphasis put on post-communist countries. First model points out that redistribution can be a luxury social good. Second model shows the inverse process and supports the hypothesis of a positive relationship between redistribution and overall income equality.
income inequality redistribution factor income disposable income Gini coefficient sharegain