The Distribution of Economic Well-being in Urban Russia at the End of the Soviet Era

Assessing the extent of inequality and how various groups in the population were faring in the former Soviet Union is difficult. There are conceptual problems and severe data limitations. Here we analyse the distribution at the household level using unique microdata. The sample was collected for the Russian city Taganrog in 1989. We portray inequality in equivalent income terms, investigate income packaging, decompose inequality by population subgroups and relate equivalent income to household characteristics. The results indicate that inequality in living standards for urban Russia was small, but not extremely small. Public sector transfers and income taxes played a smaller role than in several advanced Western countries. The income situation of a household in the former Soviet Union was very strongly linked to its work efforts and dependency burden. Thus, aged persons and families with a newborn child were much worse off than people of active ages. Persons in households with a female head had considerably lower income than those with male head of households. The results also shows a clear positive relation between length of education and living-standard.