The structure of incomes and social protection during the transition: the case of Bulgaria

Bulgaria provided its citizens with a comprehensive social safety net which included retirement and disability pensions, and free health and education services. It also had full employment with highly compressed wages. However, with its transition to a market economy, output declined, wages dropped, and unemployment rose. Meanwhile, self-employment income increased as sharply as unemployment and in-kind income has become a successful coping mechanism, but there was hardly any change in social transfers. Moreover, the social safety net benefits mostly the wrong target, the middle income group. Reforms in social services are clearly needed.
Bulgaria is a lower-middle income country with a population of about 8.5 million. In late 1989 it began introducing radical political and economic changes aimed at transforming the country into [...]