Equally poorer: inequality and the Greek debt crisis

Abstract

In this paper, we discuss the evolution of inequality in Greece from 2004 to 2021 in light of the Greek debt crisis that led to a sharp drop in gross domestic product per capita between 2008 and 2013. While aggregate measures of income inequality, such as the Gini coefficient, suggest a marginal improvement, domestic perceptions of social fairness remain bleak. To delve deeper into this paradox, we explore additional aggregate and distributional aspects of Greece's social landscape during this period. Our analysis reveals several contributing factors: a compression of earnings, benefits and pensions; a sharp increase in social exclusion; and high inequality in access to basic public services and housing. These factors go beyond what headline inequality indices indicate, illustrating how the sovereign debt crisis and subsequent austerity measures have affected individuals differently based on their socio-economic background, while also reducing overall welfare across the Greek population. Moreover, chronic institutional inefficiencies and widening disparities in access to services and housing significantly influence perceptions of inequality and contribute negatively to the country's social cohesion.