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Consumption smoothing and vulnerability in Russia

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  • Christopher Gerry
  • Carmen Li

Abstract

Applying bootstrapped quantile regression to the Russian Longitudinal Monitoring Survey (RLMS) data, we examine the channels through which individuals experience and seek to cope with changes in consumption. We find that married individuals living in small households, with educated heads in urban areas are better equipped to smooth consumption. Investigating the impact of idiosyncratic shocks, we find that the labour market is an important transmission mechanism allowing households to smooth their consumption but also exposing them to risk, mainly through job loss. Outside of pension payments, the formal social safety net does not facilitate consumption smoothing, thus heightening the importance of informal coping institutions. It transpires that both support from relatives/friends and home production act as important insurance mechanisms for the most vulnerable. In contrast with previous findings, it would seem that regardless of its historical, political and social roots, the garden plots and dachas, often romanticized in Russian literature, do provide a means by which 'urban' Russians are able to cope with economic fluctuations. We finish by stressing the important policy lessons for Russia's developing market economy.

Suggested Citation

  • Christopher Gerry & Carmen Li, 2010. "Consumption smoothing and vulnerability in Russia," Applied Economics, Taylor & Francis Journals, vol. 42(16), pages 1995-2007.
  • Handle: RePEc:taf:applec:v:42:y:2010:i:16:p:1995-2007 DOI: 10.1080/00036840701765403
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    References listed on IDEAS

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    1. Ethan Ligon & Laura Schechter, 2003. "Measuring Vulnerability," Economic Journal, Royal Economic Society, vol. 113(486), pages 95-102, March.
    2. Seeth, Harm Tho & Chachnov, Sergei & Surinov, Alexander & Von Braun, Joachim, 1998. "Russian poverty: Muddling through economic transition with garden plots," World Development, Elsevier, vol. 26(9), pages 1611-1624, September.
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    Cited by:

    1. Vadym Volosovych, 2013. "Risk sharing from international factor income: explaining cross-country differences," Applied Economics, Taylor & Francis Journals, vol. 45(11), pages 1435-1459, April.
    2. Nivorozhkina, Ludmila & Nivorozhkin, Anton & Abazieva, Kamilla, 2010. "Drop in consumption associated with retirement. The regression discontinuity design approach," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 19(3), pages 112-126.
    3. Maksim Yemelyanau, 2009. "Second agriculture in Belarus and Ukraine:subsistence or leisure?," BEROC Working Paper Series 08, Belarusian Economic Research and Outreach Center (BEROC).
    4. Kseniya Abanokova & Michael Lokshin, 2015. "Changes in household composition as a shock-mitigating strategy," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 23(2), pages 371-388, April.
    5. Celidoni, Martina, 2011. "Vulnerability to poverty: An empirical comparison of alternative measures," MPRA Paper 33002, University Library of Munich, Germany.
    6. Nazim Habibov & Elvin Afandi, 2017. "Community-Level Social Capital and Household Strategies for Coping with Global Crisis in Transitional Countries," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 130(2), pages 687-710, January.
    7. Kumo, Kazuhiro, 2015. "Research on Poverty in Transition Economies: A Meta-analysis on Changes in the Determinants of Poverty," RRC Working Paper Series 51, Russian Research Center, Institute of Economic Research, Hitotsubashi University.
    8. Anton Nivorozhkin & Ludmila Nivorozhkina & Kamila Abazieva, 2013. "Expenditures and Income Adequacy at Retirement," Economics Bulletin, AccessEcon, vol. 33(3), pages 2017-2023.
    9. Azeem, Muhammad Masood & Mugera, Amin W. & Schilizzi, Steven, 2016. "Poverty and vulnerability in the Punjab, Pakistan: A multilevel analysis," Journal of Asian Economics, Elsevier, vol. 44(C), pages 57-72.
    10. Tomoki Fujii, 2016. "Concepts and measurement of vulnerability to poverty and other issues: a review of literature," Chapters,in: The Asian ‘Poverty Miracle’, chapter 3, pages 53-83 Edward Elgar Publishing.
    11. Tomoki Fujii, 2016. "Concepts and measurement of vulnerability to poverty and other issues: a review of literature," Chapters,in: The Asian ‘Poverty Miracle’, chapter 3, pages 53-83 Edward Elgar Publishing.
    12. Wang, Haining & Cheng, Zhiming & Smyth, Russell, 2016. "Language and consumption," China Economic Review, Elsevier, vol. 40(C), pages 135-151.
    13. Larysa Krasnikova & Olena Osinkina & Tamara Podvysotskaya & Yuriy Podvysotskiy, 2012. "Social Aspects of Crisis Effects on Households: The Case of Ukraine," wiiw Balkan Observatory Working Papers 103, The Vienna Institute for International Economic Studies, wiiw.
    14. Loretta G. Platts, 2015. "A prospective analysis of labour market status and self-rated health in the UK and Russia," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 23(2), pages 343-370, April.

    More about this item

    JEL classification:

    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • P20 - Economic Systems - - Socialist Systems and Transition Economies - - - General

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