Abstract

This study analyses changes in income inequality in Malta and its driving factors between 2005 and 2018. The study employs and analyses data collected by Malta’s National Statistics Office, which conforms with the European Union Survey on Income and Living Conditions. Education and labour status are identified as key drivers behind income inequality changes over the period under review. While the Gini coefficient remained relatively stable between 2005 and 2018, the Lorenz curve moved further away from the line of equality at the upper end of the income distribution, showing modest increases. Over the 2014-2018 period, Government intervention has been mildly neutralizing through social transfers but not through taxes. Social transfers provided a greater safety net to citizens than they did during the 2005-2009 period, whereas tax reforms have abraded some tax progressivity. We also find that inequality was mostly attributed to differences in the individual’s qualifications, hours worked, occupations, and household employment structure and size, highlighting an important role for policy to further reduce the barriers to economic inclusion.

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