Economic crisis and political participation in a transitional economy: evidence from Russia

The experience of countries adjusting in the wake of the global crisis of 1997-2000 has awakened many debates related to the political economy and social costs of adjustment. Amongst these, the experience of Russia is particularly controversial, both because of the great severity of the shock experienced by a large number of Russians during the process of perestroika, and because of the political consequences, which in many provinces have involved street protests and demonstrations and in some, also violence and demands for secession (Giuliano 2006). These political consequences are relevant to the general question of the political feasibility of adjustment in the circumstances of the present decade, which is examined in several papers within our research project (e.g. Mosley 2007a, 2007b). In this paper, we examine within this context political participation and wage inequality during the 1998 financial crisis in Russia. We use two household survey data sets. The VTsIOM household survey dataset, conducted in 1998 and 1999, was used to analyze individuals’ response patters to escalating economic hardship. Data from the Russian Longitudinal Monitoring Survey (RLMS) was employed in our analysis of the welfare impacts of the crisis. We address two key questions. Firstly, we attempt to identify major factors behind individuals’ propensity to take part in a political protest. In particular, we look at what determines individual support for reform and whether individual propensities change with the targeted audience. Secondly, we attempt to determine who are the winners and losers from the crisis, in the spirit of the earlier analysis of Brainerd(1998). In particular, we analyse whether wage inequality widened during the crisis and whether wage discrimination worsened. These questions are of interest for several reasons. Firstly, the pace and extent of the crisis had a dramatic impact on Russia’s economy which, in turn, may have influenced political mobilization motivated by claims for policy reversals. Secondly, if financial crisis generated wage inequality, it is important to identify the extent, pattern, and nature of the wage inequality for effective policy formulation. The structure of this paper is as follows. In Section 2, we examine the economic crisis. In the next section, we introduce the data set and variables used for the analysis. Section 4 presents our methodology and Section 5 provides the empirical results. Section 6 concludes the paper.

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