Eastern Europe and Russian Federation - Distributional impact of cash and in-kind social transfers in Eastern Europe and Russia

The author empirically explores the distributional impactof social transfers in cash and in-kind in Russia and Eastern Europe. He shows that cash transfers, on the whole, are distributed almost uniformly (equally per capita) regardless of one's position in income distribution. By contrast, in market economies, absolute amounts of cash transfers decline as one moves up the income ladder. The family allowance is the only type of cash transfer that is somewhat focused on the poor in the socialist economies. Family allowances are paid for children, and since larger households are typically poorer, some redistribution is achieved. Education benefits are also slanted slightly toward the poor, primarily through the high share of public spending on primary education. As the level of schooling rises, the distribution of education benefits resembles more closely the distribution of income. Health care benefits are distributed uniformly, per capita. In market economies, on the other hand, public health benefits are targeted more to the poor - primarily because the rich often opt out of publicly-run programs. During the transition, cash benefits in the formely socialist countries must become more targeted as well as smaller in absolute amounts. The reforming socialist economies are likely to follow the corporatist earnings-linked model of continental Europe.