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Inequality and Volatility Moderation in Russia: Evidence from Micro-Level Panel Data on Consumption and Income

  • Gorodnichenko, Yuriy

    ()

    (University of California, Berkeley)

  • Peter, Klara Sabirianova

    ()

    (University of North Carolina, Chapel Hill)

  • Stolyarov, Dmitriy

    ()

    (University of Michigan)

We construct key household and individual economic variables using a panel micro data set from the Russia Longitudinal Monitoring Survey (RLMS) for 1994-2005. We analyze cross-sectional income and consumption inequality and find that inequality decreased during the 2000-2005 economic recovery. The decrease appears to be driven by falling volatility of transitory income shocks. The response of consumption to permanent and transitory income shocks becomes weaker later in the sample, consistent with greater self-insurance against permanent shocks and greater smoothing of transitory shocks. Comparisons of RLMS data with official macroeconomic statistics reveal that national accounts may underestimate the extent of unofficial economic activity, and that the official consumer price index may overstate inflation and be prone to quality bias.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4233.

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Length: 72 pages
Date of creation: Jun 2009
Date of revision:
Handle: RePEc:iza:izadps:dp4233
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