Sources of Ethnic Inequality in Bulgaria: Evidence of Roma Discrimination

Bulgarian Roma, who constitute roughly 10 percent of Bulgaria's population, unambiguously face some of the most egregious material poverty and discrimination in contemporary Europe. Corollary, income inequality between Roma and non-Roma in contemporary Bulgaria is dramatic. Mean and median monthly net wages of Roma are roughly 60 percent that of non-Roma earnings. In terms of total net monthly household income, Roma households saw average and median incomes half the size of non-Roma households. The aim of this paper is to decompose the factors leading to this inequality. Namely, the analysis undertaken here seeks to decompose the extent to which differences in endowments -- e.g. differences in educational attainment, regional differences, household composition, and demographics -- explain inequalities between Roma and non-Roma versus the role of factors specific to Roma -- e.g. employer discrimination, structural discrimination, and any other characteristics specific to this ethnic group. By applying the World Bank's 2013 Bulgarian Longitudinal Inclusive Society Survey to a log-linear model, there is clear evidence that belonging to the Roma ethnicity depreciates labor market earnings as well as total household income when controlling for other relevant labor market characteristics. Furthermore, via a Blinder-Oaxaca Decomposition, the contribution of different factors to the gap in economic outcomes between Bulgarian Roma and non-Roma are estimated. The estimates produced by both the Blinder-Oaxaca Decomposition and the log-linear model provide clear evidence that factors like structural and employment discrimination are driving economic inequality between Bulgarian Roma and non-Roma, rather than factors like educational or demographic differences.

A Carbon Dividend as an Efficient Transfer 

In the United States, the world’s second largest emitter of greenhouse gas (GHG) pollutants, policies designed to reduce GHGs have met political resistance. Key to that resistance is fear of the potential regressive consequences of policies aimed at curbing GHGs. A cap-and-dividend or a tax-and-dividend program holds the promise of reducing GHGs without such regressive consequences. Such a program would either cap GHG emissions and sell permits to major emission sources or directly tax GHGs; the revenue collected would then be distributed in equal proportion to U.S. residents. Building from projections made by Boyce and Riddle (2007), this paper estimates the economic burden of a cap-and-dividend or a tax-and-dividend program across the income distribution. In addition to evaluating distributional consequences, this paper estimates the potential of such a program to serve as an efficient transfer program by simulating the labor supply effects of a carbon reduction program proposed by Boyce and Riddle (2007). By applying the 2008 CPS March Supplement to an adapted version of a labor supply model proposed by Saez (2002), net changes in employment, hours worked, and national income from the introduction of a cap/tax-and-dividend program are estimated. Through changes in labor supply, the introduction of a $96.9 billion carbon reduction program is projected to reduce economic output by no more than $320 million – a mere 0.0023 percent of 2007 U.S. GDP.