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Figure 3.2.2 Income inequality after social transfers (measured with the Gini coefficient) and the relative importance of the transfers in the reduction of inequality (what proportion of the initial inequality was reduced by transfers). Gini after transfers How much did transfer reduce inequality? % of initial Gini value Gini index Sweden Hungary Denmark Norway Slovakia Austria Luxembourg Finland Germany Belgium Iceland Slovenia Australia Netherlands Czech Republic South Korea Estonia Italy Spain Canada Taiwan France Greece Switzerland Ireland Great Britain Poland New Zealand Japan Portugal Israel Turkey USA Uruguay Singapore Costa Rica Mexico Chile Gini index 0 0,1 0,2 0,3 0,4 0,5 0 0,1 0,2 0,3 0,4 0,5 Source: CIA Factsheet 2012 (CIA 2012), OECD online database Social Inequality (OECD 2012) Figure 3.2.3 The percentage of the population that agrees strongly with the statement that the differences in income in the country is too large. Percentage Norway Philippines New Zealand Belgium Venezuela Cyprus Denmark Australia Great Britain USA Finland Spain Sweden Chile Argentina China Switzerland Japan Taiwan West Germany South Africa Austria South Korea Iceland Turkey Czech Republic Poland Israel Bulgaria Latvia Slovenia Croatia Portugal Slovakia Russia Italy Estonia East Germany France Ukraine Hungary Percentage 0 10 20 30 40 50 60 70 80 0 10 20 30 40 50 60 70 80 Source: ISSP 2009 survey, author’s calculations after the taxes and benefits in the Gini Index (0.23). The indicators for Denmark, Norway, Hungary and Slovakia were also low. Incomes were more unequal in Portugal (Gini value of 0.39), and a similar situation existed in Israel, Japan and New Zealand. Of the states being analysed, the greatest differences in income were in Chile, Mexico, Costa Rica, Singapore and Uruguay, where the Gini Index value is close to 0.5. In regard to its income inequality, Estonia tends to be among the states with greater inequality, like Spain, Italy, Greece, France, Ireland and Poland. Compared to the other European states, Estonia is characterised by the limited effectiveness of our social system in the reduction of inequality. The social protection effect in Iceland and Switzerland, as well as in South Korea and Chile, is even smaller than Estonia’s. The situation in Japan, the U.S. and New Zealand is similar to Estonia. Along with the inequality determined on the basis of these objective criteria, the population’s subjective sense of equality is also important. The interpretations 116 Estonian Human Development Report 2012/2013
and explanations of the extent of inequality indicated by various surveys allude to the importance of subjective assessments and perceptions, and its significance for Estonia has also been shown (Lindemann 2011. Below, we examine how the populations assess the level of inequality that exists in reality. These assessments originate from a survey (ISSP Research Group 2013) conducted between 2009 and 2010 in 40 states. The respondents were asked whether they agree with several statements, which included: “Differences in income [in our country] are too large”. The respondents could choose between four possible answers: 1 – strongly agree, 2 – agree, 3 – neither agree nor disagree, 4 – disagree, 5 – strongly disagree. The answer “can’t choose” was also possible. The following diagram includes only the data from the respondents who chose “strongly agree”. It turns out that two-thirds of Estonia’s population considered the income differences to be too large, which in the comparison of states is a remarkably high indicator. Of the post-Communist states, an even more critical attitude than Estonia’s was found in Hungary, Ukraine, and also East Germany. (Since it was an opinion poll, it was considered important to differentiate the data for the states that had belonged to the Eastern bloc, i.e. for East Germany and West Germany separately). The dissatisfaction indicator in West Germany is considerably lower (less than 50%), which indicates how the previous social experience has affected the perception of inequality. It should definitely be taken into consideration that the survey was conducted at the same time that the economic crisis occurred, which may have caused the assessments of the respondents to be more negative. However, in 1999, the same survey was carried out in 26 states, and based thereon, it can be said that the economic crisis was not the most important factor shaping the attitudes of the respondents. Namely, it turns out that, in some of the states, the opinions were considerably more negative than ten years earlier (e.g. Bulgaria, Slovakia, Czech Republic, Russia and also Norway); however, in others, it was considerably more positive (e.g. East and West Germany, Hungary, Poland, Cyprus, and France). The attitudes were stable in Iceland, Sweden, and England. Therefore, it can be concluded that the impact of the global economic crisis is reduced by the developments in the specific state, for example, the inequality within the state. One can surmise that, behind these negative assessments are people’s good opportunities for comparing themselves with other states, and they choose to compare themselves with the more successful ones. It also seems that in the states with smaller differences in income, there are few people who assess inequality to be extremely large. The exceptions are New Zealand, the U.S. and Great Britain, where the differences in income are quite large, but few people consider them to be too large. All three of these countries represent the liberal welfare model, where greater emphasis is placed on the equality of opportunities, rather than on results, and therefore, the public tolerates greater inequality. At this point, we should ask, if the equalisation of incomes in Estonia is too slow? Sometimes, this is Figure 3.2.4 Changes in the Gini Index during the 1990s and 2000s Changes that took place during the economic crisis in the second half of the 2000s Development from the 1990s to the mid-2000s % of Gini value Poland Estonia Norway Portugal Ireland Hungary Turkey Czech Republic Belgium Italy Slovenia Greece Slovakia Finland Israel Chile Austria New Zealand USA Spain Mexico France Canada Japan South Korea Netherlands Germany Great Britain Denmark Australia Switzerland Sweden Luxembourg Iceland % of Gini value -25 -20 -15 -10 -5 0 5 10 15 -25 -20 -15 -10 -5 0 5 10 15 Source: OECD database (OECD 2012b), author’s calculations. Estonian Human Development Report 2012/2013 117
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ESTONIAN HUMAN DEVELOPMENT REPORT 2
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Table of Contents 1 Human Capital /
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Dear Reader Since the moment when E
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1Human Capital Estonian Human Devel
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the HDI’s content has also been h
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Figure 1.1.1 The human development
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Figure 1.1.7 The income sub-index:
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The results of the Princeton Projec
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the hypothetical generation. The to
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Figure 1.2.3 Life expectancy. Eston
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Table 1.2.2 also presents the most
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The new trends that are appearing i
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Figure 1.2.8 Components of populati
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New features were introduced into E
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Initiation of Voluntary Birth Contr
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Table 1.3.1 Best-known educational
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(OECD 2012b). Therefore a certain r
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The reciprocal dependence of the pr
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Figure 1.3.8 Percentage of students
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Table 1.3.4 The quality of educatio
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1.4 Health Raul-Allan Kiivet Change
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Table 1.4.1 Usage of prescription m
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allude to the fact that approximate
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promote healthy lifestyles among th
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Figure 1.5.1 The World Values Surve
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Table 1.5.2 Estonia’s participati
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Figure 1.5.3 The percentage of the
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Figure 1.5.5 Percentage of the Esto
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The fact that Estonia’s position
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Summary Mati Heidmets The global vi
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2People and Society Estonian Human
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Table 2.1.1 Structure of the Bertel
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Page 69 and 70: 2.2 Freedom and democracy Martin M
Page 71 and 72: Table 2.2.1 Democracy indicators Po
Page 73 and 74: Figure 2.2.2 The distribution of th
Page 75 and 76: would be something that none of the
Page 77 and 78: political participation are general
Page 79 and 80: strongest, while a very small perce
Page 81 and 82: is concerned, Estonia is one of the
Page 83 and 84: Figure 2.4.2 Average circulation of
Page 85 and 86: 2.5 Corruption Jüri Saar In accord
Page 87 and 88: Lithuania, 61%; and in Russia, 69%.
Page 89 and 90: 2.6.2 Intentional homicides in Esto
Page 91 and 92: crime. And thirdly, there was a wis
Page 93 and 94: References 1. Ahven, A. & Tabur, L.
Page 95 and 96: states included in the EU Kids Onli
Page 97 and 98: 2.8 Public assessments of the state
Page 99 and 100: Figure 2.8.4 Changes releated to tr
Page 101 and 102: of the state’s development are en
Page 103 and 104: Table 2.9.1 The positions of Estoni
Page 105 and 106: 3. IEP (2011). Structures of Peace.
Page 107 and 108: 3Welfare and the Quality of Life Es
Page 109 and 110: choices made, not what people say t
Page 111 and 112: Figure 3.1.5 Public social spending
Page 113 and 114: tion agreed upon the social contrac
Page 115 and 116: References 1. Aidukaite, J. (2006).
Page 117: hand, to the “inequality of acces
Page 121 and 122: 5- much more than I deserve. Some d
Page 123 and 124: people in Estonia consider the inco
Page 125 and 126: Table 3.3.1 Experienced Well-Being
Page 127 and 128: at about 70%. In Latvia and Lithuan
Page 129 and 130: sign. It seems that the usual view
Page 131 and 132: 3.4 Quality of life Anu Toots 3.4.1
Page 133 and 134: a uniform composite indicator has n
Page 135 and 136: 3.4.6 The components of life qualit
Page 137 and 138: Figure 3.4.4c Perceived quality of
Page 139 and 140: Figure 3.4.5 Changes in the depriva
Page 141 and 142: 3.5 Environment dimension of well-b
Page 143 and 144: Figure 3.5.1.b Estonia’s position
Page 145 and 146: 3.5.4 Energy intensity The energy i
Page 147 and 148: productivity, which is defined as t
Page 149 and 150: perceive themselves as worse off th
Page 151 and 152: 4The Economy Estonian Human Develop
Page 153 and 154: vide a valuable connection for maki
Page 155 and 156: Figure 4.1.3 Components of economic
Page 157 and 158: ule of law, the sub-indicators for
Page 159 and 160: References 1. Acemoglu, D.; Robinso
Page 161 and 162: Development Report employs generali
Page 163 and 164: and pasture land, and this was capi
Page 165 and 166: Basing the total and net savings re
Page 167 and 168: 4.3 Labour market Reelika Leetmaa,
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The problems include the very limit
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• Expenditures for active labour
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who lose their jobs. These ensure i
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4.4 Productivity and the economic s
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labour costs at the company level r
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Table 4.4.4 Comparison of the produ
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Figure 4.4.1 Annual average increas
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4.5 Innovation Erik Terk, Katrin M
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Table 4.5.2 Comparison of innovatio
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Table 4.5.4 Comparison of the indic
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in order to make the R&D potential
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It is characteristic of the South K
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mechanisms for increasing their sta
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Globalisation and Policy Patterns 5
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When Estonia regained its independe
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5.2 The impacts of globalisation an
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Table 5.2.2 Support of the differen
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5.3 Development policies Erik Terk,
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• C -the “Estonia-centred” su
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Figure 5.4.1 Support for the possib
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Summary Erik Terk Estonia is part o
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ehavioural patterns. Therefore, it
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EDR 2012/2013 authors Clemens Buche
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EDR 2012/2013 authors Alari Purju i
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Editor-in-Chief: Mati Heidmets Prod
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