This paper explores the changes in inequality in Croatia during the period 1973-1998. The results
based on the data from the Household Budget Surveys for 1973, 1978, 1983, 1988 and 1998
indicate that overall income inequality decreased in the 1973-1983 period, and increased
afterwards. Gini coefficient rose from 0.286 in 1988 to 0.297 in 1998. This result challenges the
general perception that inequality increased strongly during the transition period. Decomposition
of Gini changes shows that the expansion of social transfers as well as absence of stronger rise in
wage concentration account for only a mild increase in inequality.