The Important Role of Equivalence Scales: Household Size, Composition, and Poverty Dynamics in the Russian Federation

55 Pages Posted: 5 Jun 2020 Last revised: 8 Jun 2020

See all articles by Kseniya Abanokova

Kseniya Abanokova

National Research University Higher School of Economics

Hai-Anh Dang

World Bank - Development Data Group (DECDG); IZA Institute of Labor Economics; Indiana University Bloomington - School of Public & Environmental Affairs (SPEA); Global Labor Organization (GLO); Vietnam National University Ha Noi; Vietnam Academy of Social Sciences (VASS) - Centre for Analysis and Forecasting

Michael Lokshin

World Bank - Development Research Group (DECRG)

Date Written: June 4, 2020

Abstract

Hardly any literature exists on the relationship between equivalence scales and poverty dynamics for transitional countries. This paper offers a new study on the impacts of equivalence scale adjustments on poverty dynamics in the Russian Federation, using equivalence scales constructed from subjective wealth and more than 20 waves of household panel survey data from the Russia Longitudinal Monitoring Survey. The analysis suggests that the equivalence scale elasticity is sensitive to household demographic composition. The adjustments for the equivalence of scales result in lower estimates of poverty lines. The study decomposes poverty into chronic and transient components and finds that chronic poverty is positively related to the adult scale parameter. However, chronic poverty is less sensitive to the child scale factor compared with the adult scale factor. Interestingly, the direction of income mobility might change depending on the specific scale parameters that are employed. The results are robust to different measures of chronic poverty, income expectations, reference groups, functional forms, and various other specifications.

Keywords: Inequality, Poverty Assessment, Poverty Diagnostics, Small Area Estimation Poverty Mapping, Poverty Impact Evaluation, Poverty Lines, Poverty Monitoring & Analysis, Health Care Services Industry

Suggested Citation

Abanokova, Kseniya and Dang, Hai-Anh H. and Lokshin, Michael, The Important Role of Equivalence Scales: Household Size, Composition, and Poverty Dynamics in the Russian Federation (June 4, 2020). World Bank Policy Research Working Paper No. 9270, Available at SSRN: https://ssrn.com/abstract=3619560

Kseniya Abanokova (Contact Author)

National Research University Higher School of Economics ( email )

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Hai-Anh H. Dang

World Bank - Development Data Group (DECDG) ( email )

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HOME PAGE: http://sites.google.com/site/haianhhdang/

IZA Institute of Labor Economics ( email )

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Indiana University Bloomington - School of Public & Environmental Affairs (SPEA) ( email )

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Global Labor Organization (GLO) ( email )

Collogne
Germany

Vietnam National University Ha Noi ( email )

Vietnam Academy of Social Sciences (VASS) - Centre for Analysis and Forecasting ( email )

1 Lieu Giai Street
Hanoi
Vietnam

Michael Lokshin

World Bank - Development Research Group (DECRG) ( email )

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202-522-1153 (Fax)

HOME PAGE: http://econ.worldbank.org/staff/mlokshin

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