Poverty and Expenditure Differentiation of the Russian Population

All opinions expressed here are those of the author and not those of the Economics Education and Research Consortium. Research dissemination by the EERC may include views on policy, but the EERC itself takes no institutional policy positions The problem of poverty and inequality measurement in contemporary Russian society is considered within the framework of the general problem of social tension reduction via efficient organization of the social assistance system. We argue that features specific to Russian transition stipulate that poverty indicators (e.g., Foster-Greer-Thorbecke family) be calculated on the basis of expenditure rather than income as it is usually done. These features are also accounted for in the econometric model of per capita expenditure distribution. The model includes special methods to calibrate, or to adjust, the distributions obtained from the official budget surveys' statistics. The results of the empirical approbation of the technique are reported, which use the RLMS (Rounds 5 – 8) statistical data as well as budget surveys of Komi Republic, Volgograd and Omsk regions.