Russian Roller Coaster: Expenditure Inequality and Instability in Russia, 1994–98

Abstract

This paper uses the second phase of the Russian Longitudinal Monitoring Survey to investigate the changes in expenditure inequality and instability in Russia between the autumn of 1994 and the autumn of 1998. The expenditure distribution is stable in spite of the economic and political turmoil Russia is going through. However, that does not imply much stability. Households experienced considerable fluctuations in their expenditure, with over 60 percent of the population's expenditure either more than doubling or falling to less than half their previous levels. Only about 6 percent of all households experienced an expenditure shock of less than 10 percent. The inquiry in expenditure mobility suggests high levels of transitory variation in the expenditure and high levels of instability.

Wage arrears uncertainty and precautionary saving in Russia1

“…Along similar lines, Skoufias (2003) found that household consumption is only partially protected from idiosyncratic shocks to income with food consumption being better protected than non-food expenditure. Similarly, Jovanovic (2001) found that over the period 1994-98, Russian households 'experienced considerable fluctuations in their expenditure, with over 60 percent of the population's expenditure either more than doubling or falling to less than half their previous levels' (pp. 251 -2).…”

Central Asia Since 1991

“…This may reflect cultural factors such as the strength of the extended family (Buckley, 1998). Jovanovic (2001), however, reports similar results for Russia, which suggests a common problem in the former Soviet Union due to economic obstacles such as poor infrastructure 48 or undeveloped housing markets, rather than features specific to Central Asian culture.…”

“…In Eastern Europe and Russia, although inequality and poverty increased, considerable mobility occurred within the income distribution (Jovanovic, 2001;Rutkowski, 2001). In this section, household survey data from Central Asia are used to address the question of who were the winners and who were the losers from the establishment of market-based economies?…”

“…Lanjouw and Ravallion (1995) argue that household size matters for poverty studies because there are public goods in households and scale economies in housing, although studies of transition economies have found that the qualitative results are not sensitive to assumptions about size economies, e.g. Jovanovic (2001) reports that var\LQJ within a plausible range did not alter his results for Russia in any significant way.…”

Changes in Russian poverty during transition as assessed from microdata from the city of Taganrog*

“…Several authors who have analysed data from RLMS have reported a great deal of mobility in income and poverty status in Russia. (Mroz and Popkin, 1995; Lokshin and Popkin, 1999; Commander et al , 1999 and Jovanovic, 2001). Still another example is Bradbury et al , (2001) who studied poverty dynamics among children.…”