Regional Income Inequality in Lithuania

Abstract

The problem of income inequality is globally relevant, receiving the attention of both scientists and pol- iticians. Lithuania as a small country has made significant progress in approaching the standard of liv- ing in Western Europe. However, there are still differences in economic growth between separate popula- tion groups. Thus, the problem of income inequality remains very acute. Currently, researchers are widely discussing the risk of income inequality to the country’s society by analysing its causes and proposing var- ious solutions. Although scientific debates address income inequality across regions, such studies are often limited to examples of large countries. Meanwhile, there is a lack of studies on regional income inequality in small countries, so the question of whether a small country is characterised by regional income inequal- ity remains open. This research aims to examine the level of regional income inequality in Lithuania. We hy- pothesised that Lithuania has a high level of regional income inequality and this is one of the causes of the high income inequality in the whole country. To estimate regional income inequality, we used the most com- mon measures: Gini coefficient, decile ratio, and the coefficient of variation. The analysis was performed at level 3 of the Nomenclature of Territorial Units for Statistics (NUTS), according to which Lithuania is divided into 10 administrative counties. For this research, we chose the indicators illustrating income per capita on various levels, i.e., gross domestic product (GDP) per capita, average disposable household income per cap- ita, and gross hourly wages, as the various types of income can be used. For the estimation of GDP per cap- ita and average disposable household income, we analysed the data provided by the Lithuanian Department of Statistics (Statistics Lithuania) for 2014–2017. Due to a lack of data to estimate gross hourly wages, we examined the statistical data from the Lithuanian Department of Statistics for 2014. The results show that the hypothesis has not been confirmed. According to the research results, there is a small distribution of in- come between different regions of a small economy, although the level of economic development of different regions differs. The study findings are important not only from an academic perspective for identifying the causes of income inequality and raising questions for further research, but also for regional economic policy makers. The obtained results show that decisions related to a more equal distribution of income in Lithuania as a small country are determined not only by the specificity of its regions but also by the general trends of the country.

The economics of sustainability

“…It is also not clear what degree of income inequality is acceptable to society. According to Skučiene (2008), the normative aspects of income inequality stand out very well in the definitions describing the equal distribution of income:…”

“…Income inequality can be defined as a phenomenon that shows the unequal distribution of income among the population, among individuals in the economy (Skučiene, 2008). Income inequality refers to differences in income between individuals, households, countries, or any other identifiable combination of entities.…”

“…The concept of income inequality is presented in Table 2.5. Income inequality is an important socio-economic indicator that characterizes the country's socio-political situation and level of economic development compared to other counties of the world Skučiene (2008) Income inequalityincome differences between individuals in the economy Charles-Coll (2011) Income inequality is a phenomenon that reflects differences in income between individuals, households, countries, or any other identifiable combination of entities Fox (2014) Income inequality is a phenomenon that reflects the unequal distribution of income among the population Ciegis & Dilius (2018) Income inequality is defined as differences in income in the economy between individuals, persons, households, countries, or any identifiable combination of entities Figure 2.51 shows that income inequality exists and varies across EU countries. Income inequality is influenced by many factors, some of which are affected by the laws adopted in the country, the activities of the government, othersby the Dubauskas (2013) states that income inequality is also determined by unequal abilities of individuals, their education, knowledge, different working hours, work productivity, unequal working conditions.…”

Influence Economic Growth, Inflation and Decentralization Fiscal to Inequality Regional Income

“…Access to education and skills also contributes to inequality income area. Areas with restricted access to education quality height and training skills own more opportunities low to increase quality power work and power competitive economy (Laskiene et al, 2020). Besides that, inequality source power natural regions also have an influence inequality income area.…”