Inequality in the EU in the First Quarter of the 21st Century: Unusual Trends

Abstract

The article shows the unevenness of economic growth in the European Union in 2000–2023, broken down into three country groups: North, South, and East. The post-socialist East has significantly closed the gap in terms of GDP per capita at PPP (in constant 2021 prices) with the South group, creating an effect of overall convergence in per capita GDP levels in the EU. At the same time, the noticeable growth in the East group countries was accompanied by a decline in population. The gap between the North group and the rest remained, as did significant variation in country levels, although it decreased compared to the time of the EU’s large-scale expansion. At the same time, all groups lagged behind the US during the period under review. The article also examines changes in the income levels of social groups within countries. It reveals a strengthening of the position of the wealthy 10th decile of the population. At the same time, differences between country groups in the scale of tax redistribution of income have a significant impact on it: it is greatest in the developed North, less in the South, and even less in the East. The specifics of redistribution, along with differences in income inequality before taxation, have led to a noticeable convergence of the levels of the wealthy 10th decile of Eastern countries with those of the same group of Southern countries. The parameters of convergence among EU countries seem surprising at first glance: the wealthy strata are converging to a greater extent than the rest of the population or the countries as a whole.