Azerbaijan, where the inequality index is so high that it leads to a significant discount even on the low coverage rate (see figure 9). Similar to the situation in the coverage rate indicator, these countries belong to the group with low inequality-adjusted coverage rates as well.

# _Inequality index decomposition_

This paper finds that countries in South Caucasus have low coverage rates for good jobs and high inequality among population subgroups in the access to good jobs. The analysis now addresses the extent to which differences in individual circumstances beyond personal effort and choice (the unfair elements) contribute to the wide inequality in the access to good jobs. First, following the Shapley decomposition method outlined in Shorrocks (2013), between-group inequality in labor markets (D-index) is decomposed into two major contributing components: i) the behavioral characteristics of individuals related to their efforts and experience and, ii) the circumstances beyond the control of individuals, namely, gender, ethnicity, parental educational attainment, and parental political affiliation. The first component (broadly, effort and experience) is considered the fair element contributing to inequality in a labor market, while the second component (circumstances) is the unfair element. To assess the relative fairness of labor market inequality in the countries of South Caucasus, the shares of the two contributing factors in inequality in these countries are compared with the average shares in all countries surveyed in the 2015 LiTS, as well as with the averages in Belarus, Central Asia (Kazakhstan, the Kyrgyz Republic, Mongolia, Tajikistan, and Uzbekistan), Moldova, and Ukraine; Southeastern Europe (Albania, Bosnia-Herzegovina, Cyprus, Greece, Kosovo, FYR Macedonia, Montenegro, and Serbia); the European Union–11 (Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovak Republic, and Slovenia); the European Union (represented by only Germany and Italy), the Russian Federation, and Turkey.

An important finding of this paper is that a sizable share of the inequality in access to good jobs is unfair in Armenia and Azerbaijan, while the share is moderate in Georgia (figure 12). To illustrate, on the access to the first category of good jobs (those involving work of 20 hours or more a week), the share of the unfair element of inequality is small in Georgia, at 34 percent, but it is not small for Armenia and Azerbaijan. At 63 percent and 85 percent of total between-group inequality, respectively, the countries show the highest level of unfairness in the 34 countries of Eastern Europe and Central Asia, where the average share of the circumstances component in total inequality is 47 percent. The shares of circumstances in total inequality in Azerbaijan and Armenia are also higher than the averages in other sub-regions. Similar patterns in the share of the unfair element in inequality are observed in the access to good jobs involving work of 20 hours or more a week with contract and, especially, with tenure. In the category of good jobs involving work of 20 hours or more a week with contracts, Georgia registered the smallest share of the unfair element in between-group inequality.

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