Transition Welfare Gaps: One Closed, Another to Follow?

Respondents from post-communist countries have been found to systematically report lower levels of happiness and self-rated health. While the first welfare gap in happiness has closed recently, the second transition gap in self-perceived health only started to close. Specifically, this paper shows that treating all transition countries as a homogeneous group may be misleading and therefore divides 28 transition countries into three groups. As a result, in the most recent 2016 round of the ‘Life in Transition’ survey, transition countries in Southern Europe are no longer found to be different from non-transition nations in terms of their self-rated health. Although the gap in self-perceived health for transition nations in Eastern Europe is present in a basic model, it becomes less statistically and economically significant when subjective beliefs and macro-level variables are added. Countries from the former Soviet Union and Mongolia remain the only group in which respondents report 16.5%–29.1% lower probability of ‘Good’ or ‘Very Good’ health compared to other transition and non-transition countries. Controlling for communist party membership, ideological beliefs and macro-level variables somewhat reduces the gap for the former Soviet Union and Mongolia but it remains significant in multiple robustness checks. Although the gap in self-rated health now applies to only one group of transition countries, it remains an important empirical puzzle with far-reaching implications for health policy, demand for healthcare and the process of transition.