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What Determines Individual Preferences over Reform? Microeconomic Evidence from Russia

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  • Stephanie Eble

    (International Monetary Fund)

  • Petya Koeva

    (International Monetary Fund)

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    Abstract

    This paper provides empirical evidence on the determinants of individual reform preferences in Russia after the August 1998 crisis. We analyze the response pattern to survey questions about the individual's support of returning to socialism and stopping market reforms in a bivariate probit framework. Two possible explanations for the observed preferences are considered. First, personal attitudes toward reform are affected by the individuals' economic gains or losses during transition. Second, as established by research in sociology, some societal groups are more flexible than others in adapting to changes in their environment. The empirical results, which focus on the effect of age, education, labor market status, income levels and income changes on the likelihood of opposing reform, give support to both hypotheses. Interestingly, we also find a strong regional variation in reform attitudes. Controlling for individual characteristics, we establish that people who live in high-arrears regions are more likely to oppose the reform process. Furthermore, the regional income level, ethnic composition, oil production and crime rate are significantly related to the market reform orientation of the regions' residents. Copyright 2002, International Monetary Fund

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    Bibliographic Info

    Article provided by Palgrave Macmillan in its journal IMF Staff Papers.

    Volume (Year): 49 (2002)
    Issue (Month): Special issue ()
    Pages: 87-110

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    Handle: RePEc:pal:imfstp:v:49:y:2002:i:si:p:87-110

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    1. Amemiya, Takeshi, 1981. "Qualitative Response Models: A Survey," Journal of Economic Literature, American Economic Association, vol. 19(4), pages 1483-1536, December.
    2. Brainerd, Elizabeth, 1998. "Winners and Losers in Russia's Economic Transition," American Economic Review, American Economic Association, vol. 88(5), pages 1094-1116, December.
    3. Grigoriev, Serguei E. & Nagaev, Serguei A. & Wörgötter, Andreas, 1994. "Regional Economic Development and Political Attitudes of the Population of Russia: Results for the December 1993 Federal Elections," East European Series 15, Institute for Advanced Studies.
    4. Vladimir Mau & Vadim Stupin, 1997. "The political economy of Russian regionalism," Post-Communist Economies, Taylor & Francis Journals, vol. 9(1), pages 5-25.
    5. Robert J. Shiller & Maxim Boycko & Vladimir Korobov, 1992. "Hunting for Homo Sovieticus: Situational versus Attitudinal Factors in Economic Behavior," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(1), pages 127-194.
    6. Fidrmuc, J., 1998. "Political Support for Reforms: Economics of Voting in Transition Countries," Discussion Paper 1998-98, Tilburg University, Center for Economic Research.
    7. Robert J. Shiller & Maxim Boycko & Vladimir Korobov, 1990. "Popular Attitudes Towards Free Markets: The Soviet Union and the United States Compared," Cowles Foundation Discussion Papers 952, Cowles Foundation for Research in Economics, Yale University.
    8. Robert J. MacCulloch & Rafael Di Tella & Andrew J. Oswald, 2001. "Preferences over Inflation and Unemployment: Evidence from Surveys of Happiness," American Economic Review, American Economic Association, vol. 91(1), pages 335-341, March.
    9. Moulton, Brent R, 1990. "An Illustration of a Pitfall in Estimating the Effects of Aggregate Variables on Micro Unit," The Review of Economics and Statistics, MIT Press, vol. 72(2), pages 334-38, May.
    10. Adrian Mander & David Clayton, 2000. "Hotdeck imputation," Stata Technical Bulletin, StataCorp LP, vol. 9(51).
    11. Fernandez, Raquel & Rodrik, Dani, 1991. "Resistance to Reform: Status Quo Bias in the Presence of Individual-Specific Uncertainty," American Economic Review, American Economic Association, vol. 81(5), pages 1146-55, December.
    12. David G. Blanchflower & Richard Freeman, 1997. "The attitudinal legacy of Communist labor relations," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 50(3), pages 438-459, April.
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    Cited by:
    1. Hayo, Bernd, 2004. "Public support for creating a market economy in Eastern Europe," Journal of Comparative Economics, Elsevier, vol. 32(4), pages 720-744, December.
    2. Matteo Migheli, 2012. "The transition of people’s preferences for the intervention of the government in the economy of re-unified Germany," Portuguese Economic Journal, Springer, vol. 11(2), pages 101-126, August.
    3. Neher, Frank, 2011. "Markets wanted: Expectation overshooting in transition," Discussion Papers 2011/1, Free University Berlin, School of Business & Economics.
    4. Migheli, Matteo, 2009. "The two sides of a ghost: Twenty years without the wall," POLIS Working Papers 125, Institute of Public Policy and Public Choice - POLIS.
    5. Migheli, Matteo, 2010. "Supporting the free and competitive market in China and India: Differences and evolution over time," Economic Systems, Elsevier, vol. 34(1), pages 73-90, March.
    6. Kim, Byung-Yeon & Pirttila, Jukka, 2006. "Political constraints and economic reform: Empirical evidence from the post-communist transition in the 1990s," Journal of Comparative Economics, Elsevier, vol. 34(3), pages 446-466, September.
    7. Samuel Adams, 2011. "Privatization and National Development: A Case Study of Ghana," Public Organization Review, Springer, vol. 11(3), pages 237-253, September.
    8. Gabriela Inchauste & Ana Corbacho & Mercedes Garcia-Escribano, 2003. "Argentina," IMF Working Papers 03/89, International Monetary Fund.

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