The inequality gap and the wartime shock: Income distribution in Ukraine

Abstract

Economic inequality has become a major global concern, and in Ukraine its assessment is complicated by methodological disagreements, post-Soviet institutional specificity, and the unprecedented distributional effects of the full-scale war that began in 2022. The study aimed to assess the dynamics of income inequality in Ukraine over 1990-2025 through systematic comparison of alternative data sources and international benchmarking against countries of similar institutional types. The methodological framework combined the analytical category of “inequality gap”, one-way analysis of variance (ANOVA) with Tukey HSD post-hoc tests, pooled OLS, Fixed Effects, and Random Effects panel specifications, and the Hausman test for model selection. The analysis revealed a statistically significant intergroup typology of countries by inequality gap (F = 51.59; p< 0.001), within which Ukraine (0.163) belonged to the post-Soviet group alongside Georgia (0.211) and Moldova (0.185). Testing of the Kuznets hypothesis showed that the cross-country inverted U-curve (pooled OLS, peak at GDP≈10,452 USD) did not hold when the panel structure was controlled for: the Random Effects specification, selected via the Hausman test, yielded a U-shaped (anti-Kuznets) relationship with a minimum at GDP ≈ 21,288 USD. The Gini coefficient in Ukraine rose from 0.25 (2020) to 0.50 (2025), and the decomposition identified the asymmetric collapse of labour incomes in the bottom quintile alongside rising incomes of the top deciles as the key channel of this shock. The findings allowed positioning the Ukrainian situation not as a methodological anomaly but as a manifestation of institutional features of the post-Soviet space, requiring systemic reforms of economic de-shadowing and progressive asset taxation within the post-war recovery agenda.