INCOME INEQUALITY IN EU COUNTRIES

After 2004, many post transitions economies joined EU, which significantly differed in the level of development from the "old" EU countries. In literature, the concept of a two-speed Europe has become popular. Simultaneously in the global economy the gap between rich and poor countries keeps widening. Many scientific studies indicate that in the long-run increase in income inequality cause social, political and economic problems. One of the EU's priorities is to reduce disparities, for this purpose, cohesion policy is conducted. The purpose of the research is to answer the question whether income differences between old and new Members are increasing or diminishing over the last years. In the first part of the article Author will focus on income inequity problem described in literature. In the second part EU policy that aim to reduce inequality will be presented. Then paper highlights the key statistics about income inequality from Eurostat. The research period is from 2005 to 2015. In the last part of the article Author will analyze inequality gap between EU countries using various statistical methods. To show differences in income inequalities between countries the quintile analysis will be present. Author will focus also on GINI Index. Both disproportion between EU countries and intra countries will be examined. Research confirmed that inequity was changing with different speed and directions over all EU counties. Inequality was rising the most in Bulgaria and Cyprus. The Gini index also increased in Germany, Denmark, Sweden and Spain. On the other hand, it was decreasing in Poland, Romania, UK and Portugal. The highest growth in disposable income was noticed in Bulgaria and Romania, but those countries are still behind EU average. Moreover, difference between the country with the highest and the lowest income per capita is decreasing during research period. This research can be used by policy makers in to ensure proper policy is implemented to reduce income inequality and sustainable growth.