Measuring Inequality and the Impact of Social Transfers on Household Income in Russia

The study analyses the dynamics of economic inequality in Russia in 2006–2022 and the contribution of the social transfer system to income distribution in society. The study examines the distribution of recipients of social benefits by decile income groups, the amount of social transfers and its share in household incomes with different income levels. To identify the relationship between household income and the probability of receiving social transfers and the size of benefits, regressions with random effects were estimated using panel logistic regression and generalized OLS.

The study determined that the decrease in economic inequality in Russia was accompanied by increased social support to the population, especially pronounced in 2020–2022. The likelihood of receiving social benefits increased as real per capita household incomes declined, but the sum of social transfers was unrelated to household income.

The author found that recipients of social benefits were present in all decile groups, and the value of social transfers was higher in house-holds with middle-and high-income levels. At the same time, benefits for families with children and unemployment benefits were most often provided to families from lower income groups; recipients of tax breaks predominated in the upper-income groups; subsidies for housing and communal services were common among households in middle decile groups, and surcharges for fuel were evenly distributed among different income groups. On average, during the study period, about 50% of households from the bottom decile remained without any social transfers, and during the crisis of 2020–2021, only a third of households in the bottom decile received benefits.

The study results suggest that there is potential to reduce income inequality by improving the targeting of social benefits and better identifying the need for social assistance from the poorest households during an economic crisis.

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