Channels of redistribution: Inequality and poverty in the Russian transition

Abstract

Contrary to popular perception, Russia entered the transition with significant inequality. Using the large Russian Longitudinal Monitoring Survey dataset, we demonstrate that inequality has subsequently risen yet further and by end-1996 was roughly comparable to inequality in Mexico, Colombia or Malaysia. Driving this increase has been not only wealth transfers through privatization but also changes in government expenditure and a sharp growth in earnings dispersion. There has been a large, associated shift in the structure of income. The paper also looks at the incidence and depth of poverty over the period 1992-96. At the start of transition, roughly half the population of households fell below the poverty line. While this has subsequently declined, at end-1996 nearly 40 per cent of households were below the poverty line and a substantial stratum of households were locked in chronic poverty.JEL classification: D31, D63, H42, P21.

Inequality, Fiscal Capacity and the Political Regime: Lessons from the Post-Communist Transition

“…This empirical finding is consistent with the model developed by Acemoglu (2006) and offers some important lessons for policy makers in reforming countries. Additionally, we find that transition countries undertaking early programmes of macroeconomic stabilisation now enjoy lower levels of inequality; we confirm that education fosters equality and the proposition of Commander et al (1999) that larger countries are prone to higher levels of inequality. Finally, we speculate that countries experiencing a longer period under the communist regime are now less able to utilise fiscal tools to effectively raise revenue.…”

“…As discussed in Section 3.1, the division between CIS and other transition countries is strongly correlated with the distinction 19 Such analysis is easily available elsewhere. See Milanovic (1998) for a comparative analysis, Commander et al (1999) on Russia and Keane and Prasad (2006) on Poland. Among more recent contributions, Hölscher (2006) compares the Czech Republic, Hungary, Poland and Russia, showing that while in the three Central European countries income inequality increased up to the level observed in the 'old' EU countries, Russia experienced a 'hollowing out of the middle class'.…”

“…Commander et al 1999), as a crude proxy, we introduce an explanatory variable reflecting geographic area. Drawing on our descriptive analysis of democracy and inequality in CIS versus CEE countries we finally introduce another time-invariant control, years spent under communism, as in Fisher and Sahay (2000).…”

Determinants of Poverty During Transition: Household Survey Evidence from Ukraine

“…This resulted in a raising inequality of the wage distribution, driving the rise in income inequality (Keane and Prasad 2002). Additional factor increasing income inequality was the development of the private sector, including the privatization of formerly state-owned enterprises, though the evidence concerning the role of this channel in different countries is somewhat mixed (Commander, Tolstopiatenko and Yemtsov 1999;Milanovic 1999;Birdsall and Nellis 2003).…”

Why are household incomes more unequally distributed in China than in Russia?

“…Milanovic (1988) reports results for the period from 1989 to 1994 using official data and the Russian Longitudinal Monitoring Survey (RLMS). Commander et al (1999) study the period 1992 to 1996 using RLMS. Mikheeva (1999) analysed the development of average incomes of regions during the 1990s, and Carluer (2005) for the period 1985 to 1999.…”