The puzzles of economic inequality: why distribution matters
At the Publishing House "Akademperiodyka" of the NAS of Ukraine, under the program "Ukrainian Scientific Book in a Foreign Language," a collective monograph "Economic inequality through the lens of finance in Ukraine" has been published. Its authors are four young researchers from the Institute of Economics and Forecasting of the NAS of Ukraine: candidates of economic sciences Yuliia Shapoval, Pavlo Kerimov, Oleksandra Kurbet, and Oleksii Shpanel-Yukhta.
"Science is not about why, it is about why not" – this popular aphorism motivated a team of young economists from the Institute of Economics and Forecasting of the NAS of Ukraine to investigate why inequality in Ukraine is exactly as it is and how the financial sector influences it.
Inequality: numbers and human destinies
The Gini, Palma, and Theil indices – seemingly dry statistics, but behind these indicators are real people and real gaps. The first chapter of the monograph records a worrying trend: analysis of income distribution by decile groups in Ukraine from 2018–2021 revealed double polarization: not only is the gap between the rich and the poor growing overall, but also the depth of stratification within the wealthy group itself. With the start of the full-scale war, inequality did not disappear: in 2023, an increase in the Gini coefficient was recorded, and the structural picture remains stable – the lower deciles mostly live on social transfers, the middle ones have somewhat diversified but still vulnerable income sources, and the upper ones receive wages and capital income. Data for 2023 confirm that the population mostly depends on only one source, and a portfolio of several income sources remains a privilege, not the norm.
Monetary policy and your wallet: the invisible connection
Have you ever wondered how the central bank’s decision to change the key interest rate affects the income of an ordinary family? The second chapter of the monograph reveals this connection. Data analysis showed that after 2016, Ukraine entered a phase of accelerated stratification in household income structure – simultaneously, the heterogeneity of labor income and social transfers increased. In contrast, the heterogeneity of capital income remained practically insensitive to macroeconomic fluctuations, indicating institutional inertia in this segment. Analysis of data from 2007–2021 found that the heterogeneity of household labor income positively correlates with the level of economic monetization and responds to hryvnia devaluation. In other words, the depreciation of the national currency deepens the gap between those living on wages – and not in favor of the less protected. The authors separately traced how household financial strategies have changed, and the picture is discouraging: savings are increasingly shifting from profitability to liquidity – current deposits prevail, and a consistently high share of foreign currency savings indicates limited trust in the hryvnia. Consumer lending is growing, and mortgages are only gradually recovering. This is a sign of financial fragmentation – different households live in fundamentally different financial realities.
Do social benefits save from inequality?
The third and fourth chapters are devoted to fiscal policy and provide an answer that is both reassuring and alarming. Reassuring: from 2010–2021, public social expenditures did reduce economic inequality in Ukraine – in the direction predicted by theory. Alarming: the social benefits system in Ukraine is burdened with an excessive number of state obligations to a wide range of recipient categories, and the state lacks sufficient revenue sources to fulfill them. Notably, despite relatively significant social expenditures, about 40% of households for whom social transfers constitute 30% or more of monthly income still live below the subsistence minimum. The authors also draw attention to international practice: in most countries, social benefits are targeted at a narrow circle of vulnerable groups with minimal cash payments. This approach is more effective in reducing inequality than dispersing resources among numerous recipient categories.
Taxes: impact so far neutral, but…
The fifth chapter raises a sensitive topic: is the Ukrainian tax system fair? The authors’ answer is balanced but honest. The Ukrainian tax system largely relies on regressive taxes that generate sufficient revenues to finance social obligations and, since 2022, military expenditures. Transforming it into a more progressive system under current conditions is risky, as it may widen the gap between budget revenues and expenditures. Calculations show that current taxes are neutral regarding income inequality and, combined with social transfers, even somewhat reduce it. P2P platforms were separately studied. Theoretically, their impact on inequality is negative – tax evasion is concentrated among higher incomes. However, empirical evidence for this hypothesis in Ukraine has not yet been found, explained by the nonlinearity of the effect: the shadow sector apparently has not yet reached the threshold at which its impact on inequality becomes statistically significant.
Economic growth does not automatically save from poverty
The sixth chapter debunks the popular myth that economic growth by itself leads to reduced inequality. Despite a relatively low official Gini coefficient and large-scale redistribution through pensions and other social benefits, average household incomes remain below the subsistence minimum. Income equality in Ukraine is largely achieved through social transfers, not earned income, meaning it is forced rather than organic. At the same time, statistics record an almost perfect correlation between GDP dynamics and household incomes, although after 2016 incomes grew faster than GDP – thanks to administrative increases in the minimum wage, which narrowed the gap between groups but did not reduce regional disparities.
Formation of a stable middle class in question
The seventh chapter is devoted to the middle class – and questions optimistic narratives about its expansion, although the global middle class is growing, partly due to developing countries. However, in Ukraine, the picture is specific: entrepreneurship and self-employment have limited impact on incomes across all deciles, indicating an underdeveloped middle class and limited vertical mobility. The gender dimension adds another layer of problems. Despite progress in overcoming the educational gap and increasing women's representation in professional fields, significant disparities in wages and access to managerial positions persist.
Digitalization: new opportunities and new gaps
The eighth chapter explores digital transformation – with both good news and warnings. Data analysis from 2015–2024 shows that increased coverage of high-speed internet and mobile networks has reduced regional disparities in digital access. Investments in software are closely linked to higher wages – the so-called "technology premium." The development of IT clusters in Kyiv, Lviv, and Kharkiv contributes to a more balanced regional income distribution by concentrating skilled employment. However, digitalization is not an automatic equalizer: if access to technology and digital skills remains uneven, it can deepen inequality rather than reduce it. Therefore, the authors recommend targeted state programs on digital literacy and the development of affordable broadband internet as tools for inclusive economic growth.
Who is this book for
The monograph is addressed to everyone who wants to understand how economic inequality in Ukraine is actually formed and what can be done from the financial environment's perspective to prevent it.
Why in English?
The English-language monograph is a way to include the Ukrainian experience in the global intellectual discussion, presenting Ukraine not only as an object of analysis but also as a source of knowledge. Research on Ukraine conducted outside its borders often does not fully take into account internal institutional features. This monograph is a step toward overcoming such asymmetry: Ukrainian researchers reclaim the right to explain Ukraine's economic reality to the world – in their own voice.
Bibliographic description
Economic inequality through the lens of finance in Ukraine / Yuliia Shapoval, Pavlo Kerimov, Oleksandra Kurbet, Oleksii Shpanel-Yukhta. — Kyiv: Akademperiodyka, 2026. — 180 p.
ISBN 978-966-360-578-4
DOI: https://doi.org/10.15407/akademperiodyka.578.180
According to information from the Institute of Economics and Forecasting of the NAS of Ukraine