Quo Vadis? Inequality and Poverty Dynamics Across Russian Regions

Abstract

Analyses regional data on inequality and poverty in Russia during 1994–2000 using published series from the regionally representative Household Budget Survey. The author finds that the share of inequality in Russia coming from the between-regions component is large (close to a third of the total inequality), growing, and accounts for most of the increase in national inequality over 1994-2000. The author demonstrates an absence of interregional convergence in incomes across Russian regions using various techniques. On the other hand, he finds evidence of convergence in inequality within regions, trended towards an internationally high level. Based on these two findings, the author projects the dynamics of inequality and poverty in Russia over a ten-year time horizon. The projections show that if the observed trend continues, by 2010 the absolute majority of Russia’s poor will be concentrated in a few permanently impoverished regions, while relatively more affluent regions will become virtually free of poverty.