Channels of redistribution: Inequality and poverty in the Russian transition

Contrary to popular perception, Russia entered the transition with significant inequality. Using the large Russian Longitudinal Monitoring Survey dataset, we demonstrate that inequality has subsequently risen yet further and by end-1996 was roughly comparable to inequality in Mexico, Colombia or Malaysia. Driving this increase has been not only wealth transfers through privatization but also changes in government expenditure and a sharp growth in earnings dispersion. There has been a large, associated shift in the structure of income. The paper also looks at the incidence and depth of poverty over the period 1992-96. At the start of transition, roughly half the population of households fell below the poverty line. While this has subsequently declined, at end-1996 nearly 40 per cent of households were below the poverty line and a substantial stratum of households were locked in chronic poverty.     

Economic transition and the distributions of income and wealth

This paper relies on a model of wealth distribution dynamics and occupational choice to investigate the distributional consequences of policies and developments associated with transition from central planning to a market system. The model suggests that even an efficient privatization designed to be egalitarian may lead to increases in inequality (and possibly poverty), both during transition and in the new steady-state. Creation of new markets in services also supplied by the public sector may also contribute to an increase in inequality, as can labour market reforms that lead to a decompression of the earnings structure and to greater flexibility in employment. The results underline the importance of retaining government provision of basic public goods and services; of removing barriers that prevent the participation of the poor in the new private sector; and of ensuring that suitable safety nets are in place.     

Book Reviews

Béla Greskovits, The Political Economy of Protest and Patience. East European and Latin American Transformations Compared
Roman Frydman, Kenneth Murphy and Andrzej Rapaczynski, Capitalism with a Comrade's Face
Lorand Ambrus-Lakatos and Mark Schaffer (eds), Fiscal Policy in Transition. Forum Report of the Economic Policy initiative No. 3
Michael Ellman and Vladimir Kontorovich (eds), The Destruction of the Soviet Economic System. An Insider' History
Louis Emmerij (ed.), Economic and Social Development into the XXI Century     

The gender pay gap in Russia during the transition, 1992-96

This paper explores the link between rising wage dispersion in Russia over the transitional period and the gender pay gap. The work of Blau and Kahn (1996) emphasized a role for 'wage structure' in the determination of the gender pay gap, although some interpretational issues concerning their methodology have been raised recently by Suen (1997). The unadjusted gender pay gap between 1992 and 1996 exhibited some degree of stability, but the analysis presented identified increased wage dispersion as a modest agent for the widening of the gap in Russia. Ordinary Least Squares (OLS) estimates for an equation pooling observations from both gender groups, registered no statistical difference in the mean ceteris paribus gender pay gap between the two years. To complement the mean regression approach, quantile regression procedures were also employed. Although the median regression provided evidence of a statistically significant temporal increase in the gender pay gap, this finding was not supported at other chosen quantiles of the wage distribution. This result was taken to highlight the possible sensitivity of the OLS procedure.
JEL classification: J16, J31, P23.     

Toward an Improved Definition of the Wealthy*

A definition of the wealthy was proposed in this journal [Eisenhauer, J. G. (2008). An economic definition of the middle class. Forum for Social Economics, 37, 103–113]. According to the definition, “the wealthy” are people who could live poorly for a year while living off the interest on their wealth. This paper suggests a more general definition of the wealthy, which encompasses that definition as well as ones based on the ability to live at higher standards of living than the poverty level over longer periods of time than one year while living off interest income alone. Previous empirical work is revisited to show new insights offered by the new definition. The evidence points to the reemergence of a rentier class.     

Evolutionary Economics,Rational Expectations,and Monetary Policy

Wealth disparity is a critical factor in the perpetuation of blackwhite disparity in the United States. Intergenerational wealth transfers are the major determinant of household wealth formation. A program of reparations would acknowledge past and continued injustice, redress such injustices, and provide closure. Radical institutional analysis benefits this policy discussion in at least three areas: explaining the re-creation of discrimination; indicating the role of wealth disparity; and identifying the funding source for reparations. For centuries the economic surplus has enhanced white wealth relative to black wealth. A program of reparations suggests directing the surplus toward funding black-white equality.     

Is Australia Really a World Leader in Closing the Gender Gap?

Abstract

In the World Economic Forum (WEF) 2006 Global Gender Gap report, Australia was highlighted as a world leader in closing the gender gap. With reference to the Economic Participation and Opportunity Index (one of four components in the WEF Gender Gap Index (GGI)), this article assesses whether or not Australia is deserving of this recognition. Closer analysis shows that convergence in the participation gap flowed from increased participation in part-time, low-paid, and precarious jobs. Research also shows that women's entry into professional jobs has led to the feminization of some positions and that vertical segregation remains an ongoing problem. In highlighting these disparities, this article questions the capacity of the GGI to provide an adequate understanding of women's labor market participation and economic attainment.     

Evolution of wealth inequality in China

Household wealth is a key indicator that reflects national economic competiveness and individual income levels. The distribution of wealth is central for evaluating social justice in a country. This article uses a data set composed of the 2002 China Household Income Project and the 2010 Chinese Family Panel Survey to analyze the level of wealth and wealth inequality in China during 2002 and 2010. The analysis decomposes the evolution of wealth inequality during that period in terms of the structure and composition of wealth. The findings show that there was a large increase in the quantity of wealth and wealth inequality between 2002 and 2010. The level of wealth in 2010 was four times that of 2002, and housing assets were the greatest component of overall wealth in 2010. Wealth inequality also rose dramatically after 2002, with the Gini coefficient of the distribution of wealth increasing from 0.538 in 2002 to 0.739 in 2010. The rapidly escalating price of housing has been the main contributor to increasing wealth inequality in recent years.     

Same Work,Different Pay? Evidence from a US Public University

Abstract

This study examines detailed data for faculty at a typical public research university in the United States between 1995 and 2004 to explore whether gender wage differentials can be explained by productivity differences. The level of detail – including the number of courses taught, enrollment, grant dollars, and number and impact of publications – largely eliminates the problem of unmeasured productivity, and the restriction to one firm eliminates unmeasured work conditions that confound investigations of wider labor markets. The authors find that direct productivity measures reduce the gender wage penalty to about 3 percent, only 1 percentage point lower than estimates from national studies of many institutions and with fewer productivity controls. The wage structure for women faculty differs markedly from the wage structure for men. Interpreted against the institutional features of wage setting for this population, the paper concludes that penalties for women arise at the department level.