Inequality Reduction in Mongolia: A Dynamic Income Source Analysis

Zagdbazar, Manlaibaatar (2025): Inequality Reduction in Mongolia: A Dynamic Income Source Analysis.

Abstract

Between 2007 and 2022, Mongolia’s Gini coefficient decreased by 26 percent. Structural economic shifts, labor market changes, and evolving income composition drive this reduction. Using dynamic income source decomposition on household survey data, this study finds that reduced shares and concentration of imputed housing consumption and self-employment income were the main equalizing forces. In contrast, rising wage shares exerted upward pressure on inequality despite declining wage concentration. The expansion of employment in the mining, trade, and finance sectors, along with broad coverage of social welfare programs, especially child benefits, played a significant role. Pandemic-era transfers amplified the effect of the social transfers. However, gender wage gaps, regional disparities, and vulnerability of herder households persist. The results underscore the importance of targeted labor market policies, improved social transfer design, and resilience measures for rural livelihoods in resource-dependent developing economies.

• Item Type: MPRA Paper
• Language: English
• Keywords: Developing economies, household income composition, income inequality, income sources dynamic decomposition
• Subjects: D - Microeconomics > D3 - Distribution > D31 - Personal Income, Wealth, and Their Distributions; D - Microeconomics > D3 - Distribution > D33 - Factor Income Distribution; D - Microeconomics > D6 - Welfare Economics > D63 - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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