Poverty and inequality in Russia during the 1990s, an empirical investigation

Like for many Eastern European countries, the 1990s
have been a decade of far-reaching political upheavals, social and personal emancipation, decline and new
opportunities for Russia. The transition from a centrally planned economy to a decentralized operating market system was accompanied by deep economic crises in each of these countries. Unlike others, Russia has not overcome the problems until now–at least for wide sections of the population. The net balance of a decade that halved real per capita income in average, that witnessed a decline in GDP of nearly 44%, inflation of more than 60,000%, growing poverty and an enormous concentration of wealth is in fact depressing. But, nevertheless, the 1990s in Russia were far from being a uniform episode of economic decline. Developments diverged regionally and for different sectors of the economy, and between the two deep crises at the beginning and the end of the decade there was growing hope for stabilization, just as right now. This article tries to identify the impact of some economical phenomena typical of transition countries on the development of aggregate poverty and inequality.
Four guiding questions form the basis of this paper: how can one reasonably measure poverty in Russia? Which correlations are expected and found between declining income, growing inequality and poverty? How does the structural change inherent in privatization and labor market liberalization affect poverty? Is there an obvious link between inflation and poverty? This paper is basically
descriptive and argues on an aggregate level in a classical way in that several indicators of economic well-being were computed and measured on different scales in comparison to certain poverty lines. Nonetheless, the paper distinguishes itself in the colorful concert of empirical literature on poverty in Russia in that it consistently compares poverty estimates from two totally different datasets using different indicators, scales and poverty lines. On the micro level we use the RLMS longitudinal household survey and compare the results to a synthetic sample fitted to grouped data. The paper is organized as
follows: After clarifying some concepts used in our analysis in section II we summarize the historical background and the development of inequality and poverty in section III. Section IV discusses some empirical evidence for possible
reasons. Section V concludes.

• http://www.europa-uni.de/de/forschung/institut/institut_fit/publikationen/discussion_papers/2002/02-02-Grub-Suprinovic.pdf