GROWING INEQUALITIES AND THEIR IMPACTS IN THE CZECH REPUBLIC AND SLOVAKIA Martin Kahanec Martin Guzi Monika Martišková Michal Paleník Filip Pertold Zuzana Siebertová Country Report for The Czech Republic and Slovakia December 2012 GINI Country Report Czech Republic and Slovakia GINI Country Report Czech Republic and Slovakia Table of Contents 1. Introduction ...................................................................................................................................... 5 2. The Nature of Inequality and Its Development over Time ............................................................... 7 2.1.1 Household income inequality ................................................................................ 8 2.1.2 Wealth and debt inequality ................................................................................. 19 2.1.3 Labour market inequality .................................................................................... 22 2.1.4 Educational inequality ......................................................................................... 27 2.2 Whom has it affected? ...........................................................................................................33 2.3 Interdependence between the above inequalities over time ................................................38 2.4 Why has inequality grown? ....................................................................................................39 2.5 Conclusions .............................................................................................................................40 3. The social impacts on inequality ....................................................................................................41 3.1 Introduction ............................................................................................................................41 3.2 Material deprivation ...............................................................................................................42 3.3 Cumulative disadvantage and multidimensional measures of poverty and social exclusion 47 3.4 Indicators of social cohesion ..................................................................................................51 3.5 Family formation and breakdown, lone parenthood, fertility ...............................................53 3.6 Health inequalities..................................................................................................................59 3.7 Housing tenure .......................................................................................................................64 3.8 Crime and punishment ...........................................................................................................67 3.9 Subjective measures of well-being, satisfaction and “happiness” .........................................70 3.10 Intergenerational mobility .....................................................................................................74 3.11 Conclusions .............................................................................................................................75 4. Political and Cultural Impacts .........................................................................................................77 4.1 Introduction ............................................................................................................................77 4.2 Political and civic participation ...............................................................................................79 4.3 Trust in others and in institutions ..........................................................................................86 4.4 Political values and legitimacy ................................................................................................89 4.5 Values about social policy and welfare state .........................................................................98 4.6 Conclusions ...........................................................................................................................102 5. Are Public Policies Effective in Combating Inequalities?..............................................................105 5.1 Introduction ..........................................................................................................................105 5.2 Labour income ......................................................................................................................106 5.3 Taxation ................................................................................................................................110 GINI Country Report Czech Republic and Slovakia 5.4 Social expenditures ..............................................................................................................115 5.5 Education ..............................................................................................................................123 5.6 Conclusions ...........................................................................................................................127 6. Conclusions: A comparative perspective on inequality in the Czech Republic and Slovakia .......129 6.1 The nature of inequality and its development over time ....................................................129 6.2 The social impacts of inequality ...........................................................................................134 6.3 Political and cultural impacts of inequalities .......................................................................135 6.4 Are Czech or Slovak policies effective in combating inequalities? .......................................137 Reference List .......................................................................................................................................141 7. Appendix 1: Log Table Chapter 2 - CZ...........................................................................................146 8. Appendix 2: Log Table Chapter 2 - SK ...........................................................................................147 9. Appendix 3: Log Table Chapter 3 – CZ ..........................................................................................148 10. Appendix 4: Log Table Chapter 3 – SK ..........................................................................................149 11. Appendix 5: Log Table Chapter 4 – CZ ..........................................................................................150 12. Appendix 6: Log Table Chapter 4 – SK ..........................................................................................151 13. Appendix 7: Log Table Chapter 5 CZ .............................................................................................152 14. Appendix 8: Log Table Chapter 5 – SK ..........................................................................................153 GINI Country Report Czech Republic and Slovakia List of Tables Table 2.1 Distribution of inequalities, Czech Republic .......................................................................... 12 Table 2.2 Distribution of inequalities, Slovakia ..................................................................................... 13 Table 2.3 People at risk of poverty or social exclusion, Czech Republic (per cent) .............................. 17 Table 2.4 Shares of consumption on revenues for lower (20) and upper quintiles (30), Czech Republic (per cent) ............................................................................................................ 18 Table 2.5 Consumption inequalities, Slovakia (per cent) ...................................................................... 19 Table 2.6 Employment, unemployment and self-employment, Czech Republic (per cent) ................. 23 Table 2.7 Share of minimum wage on mean wage, Czech Republic (per cent) .................................... 25 Table 2.8 Jobless households, Czech Republic (per cent) ..................................................................... 25 Table 2.9 Unemployment rates according to age and education attained, Czech Republic (2011) ..... 35 Table 2.10 Gini coefficient in regions, Slovakia ..................................................................................... 37 Table 3.1 Deprivation indices, Czech Republic (per cent of total population) ...................................... 43 Table 3.2 People suffering from material deprivation, Czech Republic (per cent of total population) 43 Table 3.3 People under at-risk-of-poverty threshold, Czech Republic ................................................. 48 Table 3.4 People at risk of poverty or social exclusion, Czech Republic(per cent of total population) 48 Table 3.5 People at risk of poverty or social exclusion in Slovakia(per cent) ....................................... 49 Table 3.6 Poverty rate by age, Slovakia (per cent) ................................................................................ 50 Table 3.7 How often do you meet with friends, relatives or colleagues?, Czech Republic (per cent) .. 52 Table 3.8 Number of households by type, Czech Republic (in thousands) ........................................... 55 Table 3.9 Household type in which children live, Slovakia ................................................................... 59 Table 3.10 The distribution of households by number of children, Slovakia ........................................ 59 Table 3.11 Self-reported unmet needs for