Why So Gloomy? : Perceptions of Economic Mobility in Europe and Central Asia

Despite significant improvements in per capita expenditures and a marked decline in poverty over the 2000s, a large fraction of Eastern Europe and Central Asias population reports their economic situation in the late 2000s to be worse than in 1989....

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Bibliographic Details
Main Authors:	Cancho, César, Dávalos, Maria E., Sánchez-Páramo, Carolina
Format:	Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2016
Subjects:	ECONOMIC BOOM LIVING STANDARDS SELF EMPLOYED JOBS PUBLIC EMPLOYMENT EMPLOYMENT HISTORIES EMPLOYMENT RISKS UNEMPLOYMENT RATES MOTIVATION NATIONAL UNEMPLOYMENT RATE ECONOMIC GROWTH LABOUR OFFICE ACCOUNTING PRODUCTION EMPLOYMENT SHARE POLITICS RETIREMENT VALUATION INCOME GDP PER CAPITA AGE GROUP INFORMATION LABOR FORCE PLANNED ECONOMY POLITICAL ECONOMY WELFARE JOB EFFECTS DIMINISHING RETURNS NATIONAL UNEMPLOYMENT PRIVATE EMPLOYMENT DISTRIBUTION VARIABLES PRIVATE SECTOR EMPLOYMENT OUTCOMES EMPLOYMENT HISTORY REGION DRIVERS DEVELOPMENT LABOR MARKET PLANNED ECONOMIES INFLUENCE PRIVATE FIRM TRAINING DEVELOPMENT ECONOMICS PERFORMANCE INDICATORS ECONOMIC MOBILITY WORKER INCOME INEQUALITY DEMOCRACY UNEMPLOYED OLDER WORKERS SELF‐EMPLOYED JOB MARKET MARKETS ORGANIZATIONS BUSINESS CYCLE LOTTERY INCOME LEVELS STANDARDS LABOR UTILITY PREVIOUS RESULTS FINANCE MARKET ECONOMIES MARKET ECONOMY UNEMPLOYMENT EQUITY ENTREPRENEURIAL ABILITY CONSUMPTION EMPLOYMENT INFORMATION ECONOMIC SURVEYS HIGH UNEMPLOYMENT RATES WORKERS ECONOMIC PERFORMANCE YOUNG WORKERS WAGES EMPLOYMENT SITUATION NATIONAL UNEMPLOYMENT RATES UNEMPLOYMENT RATE HIGHER INEQUALITY VALUE INCOME DISTRIBUTIONS MACROECONOMICS LABOR MARKET EXPERIENCES AGE GROUPS PROBIT REGRESSION SUB-REGIONS INCOME DISTRIBUTION UNEMPLOYED PEOPLE EMPLOYMENT STATUS ECONOMY LABOR RELATIONS MEASUREMENT HOUSEHOLD CHARACTERISTICS PROBIT REGRESSIONS INCOME EFFECT ECONOMIC SITUATION ECONOMICS ECONOMIC SYSTEMS REGRESSION ANALYSIS ECONOMIC INEQUALITY SOCIAL CAPITAL GDP THEORY REGIONS ECONOMIC EXPANSION RISK POVERTY YOUNGER WORKERS GINI COEFFICIENT HOUSEHOLD CONSUMPTION HIGH UNEMPLOYMENT DECLINE IN POVERTY UNEMPLOYMENT BENEFITS TRANSITION ECONOMIES PRIMARY EDUCATION LABOUR OUTCOMES MACROECONOMIC PERFORMANCE PRICES ECONOMIC CONDITIONS DEVELOPMENT POLICY
Online Access:	http://documents.worldbank.org/curated/en/2015/12/25700487/so-gloomy-perceptions-economic-mobility-europe-central-asia http://hdl.handle.net/10986/23619

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Summary:	Despite significant improvements in per capita expenditures and a marked decline in poverty over the 2000s, a large fraction of Eastern Europe and Central Asias population reports their economic situation in the late 2000s to be worse than in 1989. This paper uses data from the Life in Transition Survey to document the gap between objective and subjective economic mobility and investigate what may drive this apparent disconnection. The paper aims at identifying some of the drivers behind subjective perceptions of economic mobility, focusing on the role of perceptions of fairness and trust in shaping peoples perceptions of their upward or downward mobility. The results show that close to half of the households in the region perceive to have experienced downward economic mobility, that is, that their position in the income distribution has deteriorated. The results also show that perceptions of higher inequality, unfairness, and distrust in public institutions are associated with downward subjective economic mobility. The findings from this study confirm that factors beyond objective well-being are associated with the perceptions of mobility observed in Europe and Central Asia and may explain why the region has had such a pessimistic view of economic mobility during the past two decades. Understanding what drives peoples perceptions of their living standards and quality of life is important, because regardless of objective measures, perceptions could influence peoples behavior, including support for reforms and labor market decisions. For Eastern Europe and Central Asia, a region that has undergone substantive transformations and which is still going through a reform process, accounting for these aspects is critical.

Why So Gloomy? : Perceptions of Economic Mobility in Europe and Central Asia

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