Poverty of Russian Households: What We Know About It from RLMS Database

Abstract

Natalia Soboleva — Research Assistant, Laboratory for Comparative Social Studies, National Research University “Higher School of Economics”. Address: 20, Myasnitskaya St., Moscow, 101000, Russian Federation. E-mail: nsoboleva@hse.ru

Tamara Pashinova — Research Assistant, Laboratory for Comparative Social Studies, National Research University “Higher School of Economics”. Address: 20, Myasnitskaya St., Moscow, 101000, Russian Federation.

Tatiana Karabchuk — Vice Head and Senior Researcher, Laboratory for Sociological and Economic Studies, National Research University “Higher School of Economics”. Address: 20, Myasnitskaya St., Moscow, 101000, Russian Federation. E-mail: tkarabchuk@hse.ru

This paper deals with the complex quantitative estimation of poverty dynamics in Russia. The authors use three approaches (absolute, relative, subjective) to estimate the poverty level from 1994-2009. According to the absolute approach, the threshold of poverty is living wage; this is why the consumer basket is highly discussed within the framework of this theoretical assessment of poverty. The relative approach to estimate poverty states that the group of poor includes individuals and households below the standards of consumption accepted in a society. According to the subjective approach, the poor are defined by their own subjective assessment of their material well-being. The authors relate also to a fourth (deprivation) approach to poverty estimation that involves the feeling of deprivation, but the data set did not allow implementing it.

The determinants of poverty were divided into external and internal ones. The external factors include such country characteristics as socio-economic development and inequality level, situation on the labor market, and public policy towards poverty both on a cross-regional and cross-national level. The internal factors comprise type of family and number of children, qualifications and skills of people, gender, age and education.

The basis for the empirical analysis of the paper was the Russian Longitudinal Monitoring Survey (RLMS). The data set allowed tracing the dynamics and estimating poverty on a household level. The research time period was 1994-2009. The survey was conducted annually and had the same set of questions related to the poverty estimation. The survey is representative for Russia and was conducted in 38 Russian regions. The survey covers the following aspects: household structure, living conditions, employment, health, family budgets, incomes, spending and consumption. RLMS was implemented by the Institute of Sociology (RAS), the Institute of Nourishment (RAS), “Demoscope” Research Centre, “Paragon Research International” Research Center, and the National Research University Higher School of Economics.

Poverty dynamics are described first according to the official statistics and RLMS. According to the empirical results of the paper the absolute poverty level decreased from 50% to 22% over the 15-year period. By the end of 2009, less people could not afford the minimum consumer basket. At the same time, the relative poverty level did not change and is still around one fourth of all families. These estimations are much higher than the estimations of official statistics. This fact could be explained by the different approach to income measurement. The stability of relative poverty level is connected with the fact that the incomes of poor strata increase proportionally with the incomes of those who are not poor. Hence, the poor are unable to get out of relative poverty. The absolute income growth goes along with the growth of the needs of the population. Furthermore, the discrepancy of living standards for people with different income is still very high. Taking into account that the subjective approach to poverty estimation is less reliable in giving the quantitative estimation of poverty, we showed that it mainly reflects the perception of material welfare, but not objective characteristics. In this respect it could be regarded as the satisfaction of material well-being and more general as one of the aspects of subjective well-being. This indicator became more and more important for the evaluation of country development. So according to our empirical results, most Russians are not satisfied with their incomes: two thirds think that they live worse than average and only 10% think that they live better. These did not change much over the last 15 years. At the same time, we need to keep in mind that different people can perceive the same material wealth as good or bad. Hence, it is very hard to reveal the threshold of poor by applying only the subjective approach.

Finally, we demonstrate that families with children tend to be the most vulnerable poverty group in Russia. Moreover families with one child and one working adult are predominant in this group. This category is very specific for Russia, because normally it must be possible to provide one or two children with everything necessary, especially when at least one of the parents has a full-time job. But the working poor phenomenon has already been highly discussed in the literature as a special feature of the Russian modern economy. To conclude, poverty estimation depends not only on the chosen method as such, but also on the specific definition of the poverty threshold.