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Income Distribution and Poverty Reduction in Georgia
Wednesday, 29 April, 2020

This paper analyses income distribution and poverty reduction in Georgia in the period 2010 to 2017/2018. As we have no data for 2019, our findings do not relate to the most recent distributional policies of the Georgian government.

Our results suggest that while Georgia has substantially reduced poverty and income inequality, continuous monitoring of the situation would be helpful.
Main findings are:

• Georgia has made significant progress in poverty reduction, almost halving the poverty rate to 16% during 2010 to 2015 (using the World Bank measure for lower middle-income countries). However, poverty did not decline further from 2016 to 2018 and remains high when compared to peer group countries.

• The presence of durable goods in a household can serve as a robustness check for poverty measures because household income is difficult to measure through surveys. We find that the living standards, as measured by the number of durable goods in a household, have increased. Many types of durable goods have become more widely available, particularly kitchen appliances (such as refrigerators and stoves) and mobile phones.

• Inequality in disposable income measured by the Gini index has slightly decreased but also remains high in an international comparison. About one-fifth of the inequality in market income is eliminated through redistribution through taxes and transfers. The income shares of population quintiles are fairly stable in Georgia: the top 20% of the population by income receive an income almost equal to that of the bottom 80% combined. This value is high in international comparison.

• Tbilisi is by far the most important region in terms of GDP, accounting for 51% of the total in 2018. It also outranks all other regions in terms of GDP per capita. Although the gap in GDP per capita between Tbilisi and the rest of Georgia has decreased, Tbilisi still generates 2.4 times as much output per capita as the rest of the country.

• From 2010 to 2018, the regions of Mtskheta-Mtianeti and Kakheti had the highest GDP growth per capita and Tbilisi and Samegrelo-Zemo Svaneti the lowest.

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