Working Paper: NBER ID: w15080
Authors: Yuriy Gorodnichenko; Klara Sabirianova Peter; Dmitriy Stolyarov
Abstract: 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.
Keywords: Inequality; Consumption; Income; Russia; Panel Data
JEL Codes: E20; I30; J30; O15; P20
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| falling volatility of transitory income shocks (J69) | reduced inequality (I14) |
| decrease in volatility of transitory income shocks (E39) | decrease in income and consumption inequality (F62) |
| economic recovery (E65) | decrease in income and consumption inequality (F62) |
| better self-insurance mechanisms (G52) | weaker response of consumption to income shocks (E21) |
| home production of food and regional diversity (R11) | more equal distribution of income and consumption (F62) |