The evolution of tax and benefit policy in Latvia: what has been the place of distributional considerations?
The evolution of tax and benefit policy in Latvia: what has been the place of distributional considerations?

Summary/Abstract: Latvia has one of the highest levels of income inequality and poverty in the EU. During the boom, income inequality was rising and in 2007 was the highest in the EU. During the 2008- 2009 recession, when Latvia experienced the world’s largest GDP contraction and a mass increase in unemployment, poverty, as measured by the at-risk-of poverty rate, declined as the incomes of the top quintiles fell more strongly than those of the relatively poor. The Latvian government has sometimes been applauded for this ‘achievement’ (e.g. Krastiņš, 2012). Yet the reduction in poverty is a result of the way in which this poverty indicator is measured: the at–risk-of-poverty rate shows the share of population receiving income below a certain proportion of the median income.

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