Economic inequality in Kazakhstan: causes and consequences

Abstract

In the modern world, economic inequality – the concept that includes several interconnected dimensions (wealth inequality, income inequality, wage inequality, inequality of economic opportunities) - is considered one of the essential indicators of economic development. Meanwhile, the gap between rich and poor is only increasing even in developed countries. This is especially noticeable in the United States of America, where almost 25% of the world’s billionaires live, thus the richest 1% of people own almost 50% of the total national income. According to the Bureau of National Statistics, the distribution of income among the population of Kazakhstan is relatively equal, though there is evidence that Kazakhstan is a country with a very high level of wealth inequality which likely induces inequality of opportunities. This study uses income statistics of Kazakhstanis over the period of 2011- 2019 to assess income inequality according to several dimensions: region, gender, age, education, a field of activity (industry), company type and source of income. The study confirms the official indicator of income inequality - the calculated Gini index is around 0.3. We discovered that people’s incomes vary greatly depending on their status of employment, gender, level of education, place of residence and field and type of economic activity. We also found that the higher the incomes within a group the higher is inequality. This was the case for the distribution of incomes by gender (men have higher but more unequally distributed incomes than women), by region and residence (oil-producing regions’ and urban residents have higher but more unequally distributed incomes than agricultural regions and rural residents), by industry and company ownership (more economically successful industries and private companies have higher but more unequally distributed incomes than less economically successful industries and public companies). This, however, turned out not to be the case for education where the between-group income inequality is higher than within-group inequality. Generally, we see that there is a trade-off between economic efficiency (profitability) and inequality and the government must balance them. It is important to note that there are few studies on economic inequality, thus results of this study contribute to the existing literature on income inequality in Kazakhstan.