INCOME INEQUALITY IN GEORGIA: AN EMPIRICAL ANALYSIS

Purpose: Income inequality is a significant issue in Georgia. Thus, it requires various studies from a different point of view. The purpose of this article is to analyze and overview the income inequality in Georgia. Specifically, it aims to discuss and emphasize income spatial distribution from the urban-rural perspective and its challenges. The article concerns the issues connected with income disparity and aims to estimate the Government's fiscal redistribution impact. For the latter purpose, the Gini Market and Gini disposable index are examined as well. Methodology: For the goals set above, the author used the data of the Integrated Household Survey provided by the National Statistics Office of Georgia (Geostat). Namely, the author examined income per capita breakdown analysis. To estimate income inequality and fiscal redistribution impact, the Gini index was used as well. The one provided by Geostat and Gini index (Market and Disposable) of the Standardized World Income Inequality Database (SWIID8_2) (Solt, 2019). SWIID uses the income method as well. Originality: The income inequality issues are not studied enough in Georgia. Only a few papers cover the poverty and within its frame, the income inequality is also discussed. The latter could be considered as a significant issue in Georgia. Furthermore, the article is one of the first outcomes of the author's ongoing research project studying the impact of inequality on economic growth in Georgia. Best to author's knowledge there are no latest studies of income inequality that would create a good basis for further studies. Findings: Integrated Household Survey analysis shows that income inequality is higher than it is presented by Geostat's Gini index (by total income). The difference between the urban and rural areas is high and urban area income exceeds 1.8 times to rural area income. Despite the fact, that pensions, stipends, family allowances and benefits decrease the mentioned difference. Still, during the past decade, income absolute redistribution is 0.10 and the government needs to obtain more effective fiscal tools to decrease income inequality. Another significant issue is that borrowing plays one of the key roles in rural area income. In fact, in rural areas borrowing and dissaving per capita is 30% of total income per capita excluding pensions, stipends, and allowances. The latest restrictions on money lending policies for banks and microfinance organizations will complicate money borrowing for citizens and will increase the inequality between urban and rural areas and in the total country as well. Taking into consideration that non-cash income in total income plays an equalizing role and it can't be considered as real income.