Inequality and historical legacies: evidence from post-communist regions

Abstract

Egalitarianism is one of the key elements of the Communist ideology, yet some of the former Communist countries are among the most unequal in the world in terms of income distribution. Russia became a country with very high levels of income inequality: according to the World Inequality Report (2016), top ten 10% of the income distribution in Russia earned 46% of the total income, which is comparable to the US level. How does the Communist legacy affect the income inequality in the long run? The goal of this paper is to investigate this question looking at the sample of sub-national regions. To be able to single out the causal mechanisms of the Communist legacy effects more carefully, we look at a particular aspect of the Communist legacythe legacy of the Communist Party of the Soviet Union (CPSU). We demonstrate that the sub-national regions of Russia, which had higher CPSU membership rates in the past, are characterized by lower income inequality. This, however, appears to be unrelated to the governmental redistribution policies; we link lower inequality to the prevalence of informal networks. Our analysis demonstrates the increasing impact of Communist legacy on inequality over time and has important implications for both studies of historical legacies and inequality.

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