Who Wants to Redistribute? Russia's Tunnel Effect in the 1990s

25 Pages Posted: 20 Apr 2016

See all articles by Martin Ravallion

Martin Ravallion

Georgetown University

Michael Lokshin

World Bank - Development Research Group (DECRG); National Research University Higher School of Economics

Date Written: July 1999

Abstract

Attitudes toward redistribution of wealth in Russia tend to reflect expectations of future mobility, in both directions. Few Russians expected rising living standards in the 1990s, and most expected a decline in living standards, so there was strong demand for redistribution, even among those currently well off but fearful of the future.

It seems natural to expect the rich to oppose policies to redistribute income from the rich to the poor, and the poor to favor such policies. But this may be too simple a model, say Ravallion and Lokshin. Expectations of future welfare may come into play. Well-off people on a downward trajectory may well favor such policies and poor people on a rising trajectory may not.

This resistance of upwardly mobile poor people to lasting redistribution is analogous to Hirshman's tunnel effect, as applied to traffic stuck on a congested two-lane road in a tunnel: People's spirits lift when traffic starts moving again; but when another lane starts moving and theirs doesn't, they might grow furious and want to correct things by crossing the double line separating the two lanes.

Using Russia in the 1990s as the setting, Ravallion and Lokshin analyze why some people favor governmental redistribution and others do not and whether there is a tunnel effect. They find that: ° Some 72 percent of the 7,000 adults surveyed in October 1996 favor government action to reduce incomes of the rich. But the other 28 percent were not only the currently rich. ° About 85 percent of those in the poorest consumption decile favor redistribution. But among those who expect their welfare to decline, support for redistribution is high, even among the currently rich. There is little support for redistribution among the well-off who expect to become even better off. Resistance is greatest among those on a rising consumption path who expect it to continue. ° Women tend to favor redistribution more than men. ° Those who favor redistribution include people who voted communist and people who are vulnerable: the old, women, poorly educated adults, people who live in rural areas, people who expect to lose their jobs, and people who do not think the government cares about them.

This paper - a product Poverty and Human Resources, Development Research Group - is part of a larger effort in the group to understand the political economy of redistributive policies. Martin Ravallion may be contacted at mravallion@worldbank.org.

Suggested Citation

Ravallion, Martin and Lokshin, Michael, Who Wants to Redistribute? Russia's Tunnel Effect in the 1990s (July 1999). World Bank Policy Research Working Paper No. 2150. Available at SSRN: https://ssrn.com/abstract=615035

Martin Ravallion (Contact Author)

Georgetown University ( email )

Washington, DC 20057
United States

Michael Lokshin

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

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States
202-473-1772 (Phone)
202-522-1153 (Fax)

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

National Research University Higher School of Economics

Myasnitskaya street, 20
Moscow, Moscow 119017
Russia

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