Living Standards During Transition to a Market

Household survey data from the Kyrgyz Republic are used to analyse changes in the determinants of household expenditure during the transition from central planning. Quantile regression is applied to a human capital model with consumption related to the household head’s education and controlled for demographic and locational variables. Education, region, ethnicity and family size are all significant determinants of expenditure, but the model ‘s explanatory power is stronger in 1996 than at the start of the transition in 1993. The costs of dependents became larger; an extra child was a greater economic burden than an extra pensioner especially in poorer households. The education results are more difficult to interpret; the estimated returns declined between 1993 and 1996, but better educated heads appear to have moved their households up the income distribution. JEL Classifications: O15, O53