Montenegro Country Economic Memorandum - Inequality of opportunity holds back Montenegro’s labor and human capital potential - Background Note

Jul 19, 2026

Montenegro’s income inequality remains high relative to European Union countries, even after recent declines. Economic improvements before COVID-19 reduced poverty and lowered the Gini coefficient, but crisis-related income losses and inflationary pressures may reverse progress, especially for vulnerable groups. The memorandum links inequality partly to inequality of opportunity—gender, ethnicity, location, family background, and parents’ education—showing how these circumstances shape education, employment, and labor outcomes.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages19

Reading Time48 min

Introduction

Data and methodology

Inequality of opportunity and labor income inequality

Policy options

Public Disclosure Authorized Public Disclosure Authorized Montenegro Country Economic Memorandum: Towards a resilient growth strategy Inequality of opportunity holds back Montenegro’s labor and human capital potential -Background Note- Prepared by: Trang Van Nguyen with contributions from Santiago Garriga Table of Contents 1. Introduction ................................................................................................................................... 3 2. Data and methodology .................................................................................................................. 5 3. Inequality of opportunity accounts for more than one third of Montenegro’s labor income inequality............................................................................................................................................... 6 4. Policy options.............................................................................................................................. 14 Table of Figures Figure 1: Montenegro’s income inequality is relatively high when compared to EU countries................... 3 Figure 2: More than one third of Montenegro’s income inequality is inequality of opportunity ................. 7 Figure 3: Parents’ education and gender play a major role in determining income inequality of opportunity .................................................................................................................................................... 8 Figure 4: Montenegro has notable disparities in tertiary education attainment ............................................ 9 Figure 5: Parents’ education and the presence of working parents contributed greatly to the dissimilarity in opportunities in tertiary education attainment .......................................................................................... 9 Figure 6: Unequal opportunities on the basis of gender explains half of the overall dissimilarity in labor force participation in Montenegro............................................................................................................... 10 Figure 7: Montenegro’s dissimilarity in employment due to childhood circumstances is higher than in all EU countries................................................................................................................................................ 11 Figure 8: Parent’s education and financial situation during childhood are important contributors to this dissimilarity in employment opportunity.................................................................................................... 12 Figure 9: Children’s years of school are linked to those of their parents.................................................... 13 Figure 10: Chances of moving up the education ladder in the next generation are low in Montenegro..... 14 1. Introduction Montenegro’s income inequality, though recently on a decline, is still relatively high when compared to European Union (EU) countries. Prior to the COVID-19 pandemic, during 2015- 2019, positive developments in several social and economic indicators were associated with a boom period, reducing income inequality. Economic growth, job creation, and falling unemployment reduced poverty, with rural and low-income households able to benefit from this boom period. The share of Montenegro’s population living on income below the Upper Middle Income Class poverty line of $5.50 per person per day in 2011 PPP fell from 23.6 percent in 2012 to 16.9 percent in 2018. The income of the poorer segments of the population grew by more than for the average, reducing the Gini coefficient of income from 36.5 in 2015 to 32.9 in 2019. Nevertheless, these positive developments and declining inequality could have been reversed during the COVID-19 crisis, when vulnerable population in informal work might have suffered the greatest in income losses. The current

FAQs

Why does the memorandum focus on inequality of opportunity in Montenegro?

Because circumstances unrelated to individual achievement, such as gender, ethnicity, location, family background, and parents’ education, continue to determine education and labor market outcomes that shape income inequality.

How did Montenegro’s inequality trends change before and after COVID-19?

Before COVID-19 (2015–2019), growth, job creation, and falling unemployment reduced poverty and lowered the Gini coefficient. The memorandum warns that COVID-19 and inflation could reverse these gains, especially for people in informal work and lower-income households.

What factors are shown to influence inequality of opportunity?

The document highlights the major role of parents’ education and gender, and also examines childhood circumstances and disparities in tertiary education attainment, including differences in employment and education mobility across generations.

Jul 19, 2026

Upload by Lucas Martin