Inequality and Volatility Moderation in Russia: Evidence from Micro-Level Panel Data on Consumption and Income
University of California, Berkeley - Department of Economics; National Bureau of Economic Research (NBER); Institute for the Study of Labor (IZA)
Klara Sabirianova Peter
University of North Carolina - Chapel Hill; Institute for the Study of Labor (IZA); Centre for Economic Policy Research (CEPR)
University of Michigan at Ann Arbor - Department of Economics
June 1, 2009
Andrew Young School of Policy Studies Research Paper Series No. 09-09
We construct key household and individual economic variables using a panel micro data set from the Russia Longitudinal Monitoring Survey (RLMS) for 1994-2005. We analyze cross-sectional income and consumption inequality and find that inequality decreased during the 2000-2005 economic recovery. The decrease appears to be driven by falling volatility of transitory income shocks. The response of consumption to permanent and transitory income shocks becomes weaker later in the sample, consistent with greater self-insurance against permanent shocks and greater smoothing of transitory shocks. Comparisons of RLMS data with official macroeconomic statistics reveal that national accounts may underestimate the extent of unofficial economic activity, and that the official consumer price index may overstate inflation and be prone to quality bias.
Number of Pages in PDF File: 72
Keywords: Inequality, income, consumption, transition, Russia
JEL Classification: E20, J30, I30, O15, P20working papers series
Date posted: June 10, 2009
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