Mining, Transfers, and Urbanization: What Reduced Income Inequality in Mongolia?

Mongolia, a resource-rich economy, experienced a substantial decline in income inequality between 2007 and 2022: the Gini coefficient dropped from 0.44 to 0.32. Using nationally representative Household Socio-Economic Survey microdata, we analyze disposable household income, including imputed consumption from assets, and apply a Shapley value-based regression decomposition to identify the microeconomic drivers of inequality. Over the last 15 years, the significant reduction in inequality has been driven predominantly by broad-based asset accumulation—particularly improved urban housing and expanded livestock holdings—rather than by labor market changes. Expanding direct transfers financed by mining revenues further reinforced this decline. These findings highlight that sustained reduction in inequality in resource-dependent economies requires a combination of asset-building policies, well-targeted transfers, and inclusive human capital development.