Tag: Within-Versus Between-Country Inequality
Inequality in Europe: The Role of EU Enlargement
A new study reveals that the 2004 enlargement of the European Union helped narrow inequality in Europe. Using data from the World Inequality Database, researchers found that Eastern European countries joining the EU saw strong income growth across all income groups. This growth reduced inequality across the bloc, even though some countries experienced rising gaps internally. The study was conducted by Jesper Roine of the Stockholm School of Economics and Svante Strömberg of Uppsala University.
The Divide Before Enlargement
Before 2004, inequality in Europe reflected a clear divide between richer northern and poorer southern nations. Eastern European countries outside the EU were still adjusting to the post-communist era, facing both rapid economic changes and widening income gaps.
How Enlargement Shifted the Balance
The 2004 expansion brought ten mainly Eastern European states into the EU. These countries experienced rapid income growth that reached both rich and poor households. In contrast, many older member states—especially in Southern Europe—saw stagnating or shrinking incomes for lower- and middle-income earners.
Key Research Findings
- New Eastern European members saw faster income growth than older EU states across all income levels.
- The poorest 50% of the EU population enjoyed annual growth three times higher than the top 10%.
- Many income groups in Southern Europe lost ground in the EU-wide income rankings.
- Overall inequality in Europe fell after enlargement, despite mixed trends within individual countries.
Implications for Future Growth
The findings suggest that future EU expansions—such as the possible accession of Ukraine, Moldova, and Georgia—could also reduce inequality in Europe if new members experience inclusive growth. However, continued stagnation in older members could deepen political divides.
Read the Full Peer-Reviewed Research Paper
Explore the complete findings and analysis by reading the full report in the International Tax and Public Finance journal.