EU membership and income inequality: escaping the single and binary treatment approach

Abstract

PurposeIn this paper, the impact of the 2004 European Union accession on income inequalities within New Member States is analyzed.Design/methodology/approachAn empirical analysis is conducted with nine New Member States over the period 1991–2015, with 55 economies serving as a control group. The newly introduced (by de Chaisemartin and D’Haultfœuille, 2023) method belonging to the family of difference-in-differences (DID) estimators is applied to allow for multiple non-binary treatments.FindingsWhile accession to the European Union had a positive and significant impact on the market and net Gini coefficients in the treated countries, no evidence of the impact of accession on redistribution was found. Single-unit estimates signal that income inequalities rose due to EU membership in some member countries; the most convincing evidence shows that income distribution in Latvia was especially affected.Originality/valueThe author applied the method which addresses the presence of multiple non-binary treatments. Full-fledged membership was preceded by association status, and accession to the EU was accompanied or followed by engagement in other layers of integration (European Monetary Union and Schengen Area). Controlling for these features, the author was able to assess whether the pure EU effect contributed to increases in income inequalities.