The Distributional Consequences of Russia's Transition

This paper considers the distributional consequences of the reform programme in Russia. Although a small fraction of the population have gained under the reforms, average real household per capita income has declined significantly with households at the lower end of the income distribution suffering the greatest fall. Consequently there has been a substantial rise in income inequality. Poverty has increased sharply with an estimated 18.5% of the population on incomes below the official subsistence income level at the end of 1992. This aspect of the transition programme is a disturbing feature and may give rise to further political instability. I present various estimates on the evolution of the income distribution. The transfer of assets through privatization, the distributional impact of the tax base and the fiscal relationship between the federal and local governments are also examined.