The Redistributive Effects of Social Transfers on Income Inequality in the European Union: A Parametric Lorenz Curve Transformation Approach

This study provides an analysis of the role of non-pension social transfers in the evolution of income distribution across European Union (EU) Member States over the period 2014–2025. Whereas the standard approach relies primarily on comparison of the Gini coefficient before and after transfers, the present research also examines the distribution of the redistributive effect across income groups by analysing changes in income shares across deciles. The methodological framework, developed on the basis of a parametric transformation of the Lorenz curve, permits the assessment of both the overall change in income inequality resulting from social transfers and the model-calculated changes in the relative income shares of individual income groups. The findings suggest that the modelled effect of cash non-pension social benefits is associated with a reduction in income inequality across all analysed countries, albeit with varying intensity. The most significant redistributive effect is observed primarily in countries with more advanced social protection systems, whereas this effect remains relatively limited in some Central and Eastern European countries. The analysis of changes by decile shows that the model estimates suggest an increase in the relative income shares in the lower part of the distribution and a decrease in the shares in the upper end. At the same time, the relative ratio of these changes varies significantly across countries and over time.