Tag: Public Sector
How the Combination of Income and the Quality of Local Conditions Affects Well-being in Old Age
Contemporaneous income and the quality of local living conditions have both received recognition in the literature as important determinants of subjective well-being. However, little is known about their joint impact and the possible moderating influence each may have on the relationship with the well-being of the other. In a recent study (Myck et al. 2025), we investigated the role of income and quality of local area on different dimensions of well-being of older adults in Poland. Our findings show that a higher quality of local conditions amplifies the association between income and well-being, which implies that high-income older individuals tend to benefit more from improved local conditions. Our findings suggest that low incomes may constrain older people from taking advantage of local public services, and thus draw attention to policies aimed at improving access to these services, especially in low-income, peripheral areas. While the results also point towards broad benefits of targeted income transfers, it is notable that their effective translation into higher well-being strongly varies with the quality of municipal local conditions.
Introduction
As most developed countries face rapid population ageing, governments continue to seek effective policies to support older adults. Identifying effective policy solutions remains vital in supporting different population groups, including the growing group of older citizens. In this brief, we present a summary of results from a recent study (Myck et al. 2025), in which we examine the role of the combination of incomes and local conditions for the well-being of older individuals. The analysis is conducted on data from Poland, a country characterised by rapid population ageing and a recent prioritisation of monetary transfers in the policy mix, with much less attention given to the financing of local and centrally funded public services. The analysis aims at understanding the role of the quality of local conditions for the well-being of older individuals, and at identifying how the level of income modifies this role. In other words, we examine if higher income affects individual well-being differently in high- compared to low-quality regions.
Subjective well-being has for a long time been examined in relation to individual socio-economic characteristics, like education, health, material conditions and social relations (Layard 2006, Dolan et al. 2008). Many authors have also stressed the importance of the local environment and the quality of public services (Aslam and Corrado 2012), although the influence of local conditions on well-being has been documented mostly at high levels of aggregation (countries or large sub-national regions; Perovic and Golem 2010; Colombo et al. 2018). Principally, though, the combined implications of local conditions and the material situation at the individual level on well-being remain largely underexplored. In our study we explore granular local conditions at the level of municipalities, allowing us to examine the relationship accounting for significant within-country differences in a shared institutional framework. Such disaggregation seems especially important in analysing the quality of life of the older population due to the likely relevance of local health and care services, high-quality transport options, local safety, green spaces and other public services.
Individual and Local Factors
To examine the direct and moderating roles of local conditions on well-being and their relation with income, we rely on a combination of individual- and local-level data (for methodological details, see Myck et al., 2025).
The individual-level data comes from the Polish part of the Survey of Health, Ageing and Retirement in Europe (SHARE). This dataset provides detailed information on health, labour market activity, material situation and social relations of individuals aged 50 years and above for almost all European countries. In addition to the usual socio-demographic information (age, gender, education, marital status, and income), SHARE collects several self-reported measures of physical and mental health, as well as a number of broad dimensions of quality of life. One such measure is CASP, which aims to capture the quality of life among older individuals in four important dimensions: Control, Autonomy, Self-realisation and Pleasure. With twelve questions (three for each dimension), each participant evaluates how often they feel in a certain way or experience certain situations. The final outcome is a summed score in the range of 12 to 48, with higher values indicating a higher quality of life.
For the purpose of our analysis, the individual dataset has been augmented with regional-level information. To capture as much variation in the quality of local conditions as possible, we rely on 14 indicators collected either at the municipal or county level (respectively, the bottom and middle tiers of the administrative division of Poland). They represent the quality of localities in terms of economic factors, housing infrastructure, green spaces and health services. Given the high correlation between these regional variables, they have been combined into a single local quality index using principal component analysis (PCA). The index is calculated on the municipality level, with higher values representing better quality of local conditions. Figure 1 below shows the spatial distribution of the index across all Polish municipalities, highlighting significant regional differences in the local quality of life in Poland, particularly between the Western and Eastern parts of the country.
The Role of Income and Local Conditions for Individual Well-being
We examine the relationship between well-being, contemporaneous household income, and local conditions in a panel random effects regression, controlling for an extensive vector of covariates. Our results confirm a strong positive association between income and well-being, with a 100 per cent increase in disposable income corresponding to increases of up to 0.66 points on the CASP scale. While this may seem small, given the scale of the CASP measure, the effect is similar to that of being employed relative to being retired (0.56 CASP points), married relative to being widowed (0.78), and very close to the average difference in CASP between men and women, conditional on other controls (0.57).
Figure 1. Distribution of the index capturing the quality of local conditions at the municipality level in Poland
Note: Municipality borders are in white, regional borders in yellow. Source: Myck et al. (2025).
We also find that the regional index is positively correlated with well-being. Importantly, though, since income and the quality of regional conditions are strongly correlated, we examine the importance of their interaction in the well-being regression. This facilitates the investigation of the differential reaction of well-being to income for different values of the index (and vice versa). In Figures 2a and 2b we present average marginal effects of each one of the variables as calculated at different percentile levels of the other.
The results indicate noticeable variation in the strength of the association between income and well-being, depending on the quality of local conditions (Fig. 2a). Income seems to matter little at the lower end of the distribution of the regional index and much more in localities of better quality.
Figure 2. Average marginal effects (AME) of income and the regional index on well-being
a) AME of log(Income) across distribution of the regional index
b) AME of the regional index across the distribution of log(Income)
Note: Figures show point estimates of AMEs and the corresponding 90% confidence intervals. Well-being is measured with a CASP score of 12-48. Source: Myck et al. (2025).
While the growing role of income as local conditions improve might seem surprising, it well aligns with the fact that consumption of some publicly provided goods and services is dependent on or related to income: apart from the obvious examples such as culture, more important dimension of access to public services might relate to the areas where rich and poor people live, the quality of public transport and easy access to highly localized public services.
Strong positive effects of regional quality on well-being are also observed among respondents with the highest incomes (Fig. 2b). The association for low-income individuals cannot be statistically differentiated from zero.
Conclusion
The results of our study suggest that for high-income older individuals in Poland, better local conditions are reflected more strongly in their well-being compared to that of low-income residents. For the poorest older individuals, improvements in local conditions have little or no bearing on their well-being. At the same time, increases in income are associated more strongly with well-being in areas with the highest levels of quality of local conditions.
The policy implications of our results thus highlight the detrimental consequences of the combination of low income and poor quality local conditions for individual well-being and the challenges to improving the latter. Our results suggest that effective policies aimed at increasing the well-being of older adults require a careful combination of direct and indirect measures, or otherwise a combination of support focused on income transfers with provision of, and better access to, the relevant range of public goods and services.
Our results also point towards targeted rather than simple universal income transfers: greater income increases are needed in low-quality areas compared to top-quality ones to secure the same change in well-being. Moreover, the fact that local quality translates differently into well-being for the rich and the poor suggests that there are significant disparities in access to local services by income level. This, in turn, calls for developments in access and mobility opportunities and investments in local public services to ensure better access to these services among low-income residents. Local policies in high-quality areas should become more sensitive to the needs of poorer older inhabitants, while improvement of local conditions in low-quality regions needs to accompany direct transfer policies for these to effectively translate into a higher quality of life of older individuals.
Acknowledgement
The authors acknowledge the support from the Swedish International Development Cooperation Agency, Sida.
The original study (Myck et al. 2025) was financed through a joint grant of the Polish National Science Centre (NCN, project no: 2018/31/G/HS4/01511) and the German Research Foundation (DFG, project no: BR 38.6816-1) in the international Beethoven Classic 3 funding scheme (project AGE-WELL).
References
- Alesina, A., Di Tella, R. and MacCulloch, R., 2004. Inequality and happiness: are Europeans and Americans different? Journal of Public Economics, 88 (9–10), 2009–2042.
- Aslam, A. and Corrado, L., 2012. The geography of well-being. Journal of Economic Geography, 12 (3), 627–649.
- Colombo, E., Rotondi, V. and Stanca, L., 2018. Macroeconomic conditions and well-being: do social interactions matter? Applied Economics, 50 (28), 3029–3038.
- Myck, M., Oczkowska, M. and Kulati, E., 2025. Income and well-being in old age: The role of local contextual factors. The Journal of the Economics of Ageing, 30, 100551.
- Perovic, L. M. and Golem, S., 2010. Investigating Macroeconomic Determinants of Happiness in Transition Countries: How Important Is Government Expenditure? Eastern European Economics, 48 (4), 59–75.
- Rossouw, S. and Pacheco, G., 2012. Measuring Non-Economic Quality of Life on a Sub-National Level: A Case Study of New Zealand. Journal of Happiness Studies, 13 (3), 439–454.
Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.
Private and Public Sectors in the Belarusian Economy: Where Has the Pendulum Swung After 2019?
The Belarusian Private Sector experienced dynamic growth in the 2010s and, by the start of the current decade, matched the public sector in its contribution to GDP. However, since 2020, the institutional environment for entrepreneurship has significantly deteriorated. Combined with a reduction in the volume of publicly available official statistics, this has raised concerns about a significant decline in the private sector’s contribution to the Belarusian economy. This policy brief aims to systematize and analyze the dynamics of key development indicators of the private and public sectors in Belarus after 2019. It shows that private businesses have continued to play a crucial role in the Belarusian economy, generating about half of the gross value added in 2021–2024. However, the trend of increasing the share of private businesses in the economy, observed prior to 2020, came to a halt in 2021–2024. The share of state-owned enterprises also remained excessively high, despite being less efficient than private firms. If the status quo persists, sustainable long-term economic growth in Belarus is unlikely.
The Belarusian Private Sector and Public Sector Before 2020
After a period of high growth in the 2000s, the Belarusian economy entered a prolonged stagnation period. The annual GDP growth slowed from 7.1 percent in 2000–2011 to 0.7 percent in 2012–2021 and 1.1 percent in 2022–2024. The oversized state-owned enterprise (SOE) sector, extensively supported by the state via credit and other measures until 2015, is responsible for both the rapid growth in the 2000s and the subsequent stagnation (Hartwell et al., 2022).
The low efficiency of the public sector in the 2010s was partially offset by the expansion of more productive private firms. While this was not sufficient for Belarus to achieve high economic growth or close the wealth gap with Central and Eastern European countries, it did help maintain an upper-middle income per capita status – according to the World Bank classification, which Belarus has had since the mid-2000s.
The private sector developed dynamically in the 2010s, largely due to liberalized business conditions (Mironchik & Shcherba, 2022; BEROC, 2023). Labor resources flowed from SOEs to private firms (Chubrik, 2021).
By 2020, the Belarusian Private Sector’s contribution to GDP approached 50 percent (Mironchik & Shcherba, 2022) and, according to some estimates, even exceeded that level — rising by more than 10 percentage points since 2012 (Daneyko et al., 2022).
In 2020, the Belarusian economy, however, entered a period of turbulence. The Covid-19 pandemic, socio-political tensions and the government’s reactionary policies, a significant increase in sanctions pressure, and the forced restructuring of production chains significantly altered the business environment (Marozau, 2023). Support for SOEs from the government increased once again (Kalechits, 2024), while the regulatory environment deteriorated.
These changes, combined with a reduction in the volume of available statistics, have raised concerns about a decline in the private sector’s contribution to the economy after 2019. There are no known studies that have examined economic indicators of the public and private sectors since 2020. This policy brief aims to close this gap.
Economic Indicators of the Belarusian Private and Public Sectors in 2020–2024
Employment. The trend of gradual worker loss in SOEs persisted after 2019, while employment in the private sector expanded, even amidst an overall decline in the workforce.
The number of people employed declined by nearly 5 percent between 2020 and 2024 due to unfavorable demographic trends and intensified emigration. Employment dynamics varied significantly depending on the form of company ownership. The number of workers in SOEs and firms with state participation continued to decrease, whereas in the private sector, employment grew by just over 1 percent (see Figure 1).
Figure 1. Dynamics of employment in Belarus
Source: Author’s calculations based on Belstat data.
The share of the private sector in total employment increased from 42.9 percent in 2019 to 45.7 percent in 2024, while the share of the public sector declined from 57.1 percent to 54.3 percent (see Figure 2).
Industrial output and exports. The role of the private sector in manufacturing and exports of goods has remained nearly unchanged since 2019. However, the pre-2019 trend of its increasing role in the economy has stalled.
In 2024, private commercial organizations accounted for 30.5 percent of industrial production, an increase by 3.8 percentage points since 2019 (see Figure 2). Assessing the impact of individual industries on these changes is challenging, as Belarus Statistical Agency Belstat stopped publishing data on production in industrial sectors in 2022. The decline in the share of SOEs in production is, at least in part, linked to oil refining, whose output has not returned to 2019 levels due to the impact of sanctions.
Figure 2. Private Sector Share in Selected Economic Indicators of Belarus
Source: Author’s calculations based on Belstat data.
Note: Hereafter, mixed ownership enterprises (with any share of state participation) are considered part of state-owned enterprises (or the public sector).
The Belarusian industry is export-oriented, with around 70 percent of manufactured goods supplied to foreign markets. Detailed foreign trade data has also been restricted since 2022, but the volume of oil products and potash fertilizer exports can be estimated using mirror statistics, media leaks, and statements from Belarusian officials. According to this, the volume of export of oil products and potash fertilizers has significantly declined since 2019, and their share in total goods exports has decreased from 26 percent in 2019 to 15–20 percent in 2022–2024 (see Figure 3).
Other exports from SOEs have grown significantly since 2019, increasing their share of total goods exports by nearly 9 percentage points (see Figure 3). This has been driven by enhanced industrial cooperation between Belarus and Russia following the tightened sanctions in early 2022. It led to increased shipments of machinery and equipment to Russia, with the defense sector likely accounting for a significant portion.
Private firms also took advantage of vacant niches in the Russian market, increasing their exports after 2019. However, private sector exports grew at a slower pace than SOEs. With the decline in oil products and potash exports, the share of the private sector in total exports remained close to the 2019 level in 2022–2024 (see Figure 3).
Figure 3. Structure of goods exports
Source: Author’s calculations based on data from Belstat, National Bank of Belarus, World Bank, UN Comtrade and various news outlets.
Imports. The private sector has played a crucial role in rebuilding Belarus’s goods supply chains after sanctions were tightened in early 2022.
According to statistics from Belstat, the share of SOEs in goods imports decreased by 9.8 percentage points – from 28.2 percent in 2019 to 18.4 percent in 2024. However, it is reasonable to isolate the imports of oil and petroleum and gas products as the way Belstat classifies ownership may bias these figures. For example, natural gas from Russia is imported by Gazprom Transgaz Belarus – a 100 percent subsidiary of Russian state-owned Gazprom – yet classified in the data as private sector imports.
Adjusting for this, the private sector’s share of non-energy goods imports rose by almost 13 percentage points since 2019, reaching 73 percent in 2024 (see Figure 4). This signifies the private sector’s ability to adapt to the new economic reality, not only recovering but even growing its imports against the backdrop of the supply chain and financial disruptions of 2022–24.
Without the high adaptability of private businesses under drastically changing conditions, the economic downturn in Belarus in 2022 would have been much deeper, and the recovery in 2023 and growth in 2024 significantly slower.
Figure 4. Structure of goods imports
Source: Author’s calculations based on data from Belstat, National Bank of Belarus, World Bank, UN Comtrade, and various news outlets.
Investment and trade. The importance of state-owned enterprises in investments has increased slightly since 2019 but declined in sectors related to meeting consumer demand.
In 2019, 61.4 percent of all investments were generated by SOEs. During 2022–2024, this share fluctuated between 63.6–65.5 percent, while the private sector accounted for nearly 34.5–35.8 percent (see Figure 2). The slight increase in the role of SOEs in investment is linked to government efforts to intensify investment activity. This includes directives and recommendations for enterprises to initiate a new investment cycle.
In retail trade and catering, the private sector strengthened its position after 2019. Its share increased by 3 and 11.4 percentage points, respectively, reaching 86.8 percent and 78.9 percent in 2024 (see Figure 2).
Assessing the Contribution of the Belarusian Private Sector and Public Sector to Gross Value Added. There is no available data on the contribution of the public and private sectors to the gross value added (GVA) or GDP in Belarus. To estimate this contribution, an approach proposed by Daneyko et al. (2022) has been applied. This method assumes that labor productivity in the public and private sectors corresponds to overall productivity in the same proportion as wages in these sectors relate to the average wages in the economy.
According to these estimates, the private sector accounted for nearly 50 percent of Belarus’s GVA in 2019, while the public sector contributed slightly over 50 percent (see Figure 5). Between 2020 and 2024, the sectoral shares in GVA fluctuated around 50 percent.
Thus, despite the deterioration of the institutional environment for business after 2020, the significance of the private sector in Belarus’s economy has at least not declined. However, while the private sector’s importance in the economy increased before 2020, this trend did not continue between 2021 and 2024.
Figure 5. Contribution of the Belarusian private sector and public sector to Belarus’s gross value added.
Source: Author’s calculations based on Belstat data.
The public sector continued to generate less value added per employee than private businesses between 2020 and 2024. However, the gap narrowed from over 20 percent in 2019 to nearly 15 percent in 2024 (see Figure 6).
Figure 6. Efficiency of the public sector relative to the private sector
Source: Author’s calculations based on Belstat data.
Labor productivity growth in the public sector exceeded that of the private sector. However, given the influence of temporary production growth factors (vacated market niches in 2022–2023 and increased demand from Russia), this development is unlikely to be sustainable in the long term. Indirect evidence for this is the lack of a corresponding improvement in the relative efficiency of public sector investments. Between 2020 and 2024, each ruble invested by SOEs in fixed capital generated nearly 45 percent less value added than in the private sector — and this gap has widened since 2019.
Conclusion
The Belarusian private sector continued to generate around half of the country’s GVA after 2019 and remained the most productive part of the economy. Its significance did not diminish, even amid a deteriorating institutional environment and tightened sanctions against Belarus. Private businesses played a decisive role in restructuring supply chains during 2022–2024, following the disruptions in early 2022.
At the same time, the trend of increasing private sector participation in the economy, observed before 2020, has stalled, while the size of the public sector has remained substantial — particularly in industrial production. In turn, the efficiency of SOEs still lags significantly behind that of private firms, especially in terms of investment. If the current balance between the Belarusian private sector and public sectors persists, and the conditions that underpin it remain unchanged, Belarus’s long-term economic growth prospects will remain weak once the specific growth factors of 2023–2024 are exhausted.
References
- BEROC (2023). “Development of the private sector. Instead of reforms and for the economic sovereignty of Belarus”. (Ideas Bank). (in Russian)
- Daneyko, P., KEF experts (2022). “Reforming the SOE sector in Belarus: conceptual directions”. (Ideas Bank). (in Russian)
- Chubrik, A. (2021). “Back to the future or a short historical note on the Belarusian private sector”. (2021/03, IPM Research Center Discussion paper).
- Hartwell, C.A., Bornukova, K., Kruk, D., Zoller-Rydzek, B. (2022). “The economic reconstruction of Belarus: next steps after a democratic transition“. (European Parliament coordinator: Policy Department for External Relations. Directorate for External Policies of the Union).
- Kalechits, D. (2024). “Ensuring financial stability in 2023 and tasks for 2024”. (Bank Bulletin Journal, No 1/726).
- Marozau, R. (2023). “Belarusian business in turbulent times”. (FREE Network Policy Brief Series).
- Mironchik, N. & Shcherba, E. (2022). “What indicators may be useful for monitoring economic security of the Republic of Belarus?” (Bank Bulletin Journal, No 6/707)
Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.