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INTERNATIONAL
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ISSN (Print) 1996-7845

ISSN (Online) 2542-2081



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D. Popova

Russian Federation

2013. Vol. 8. No. 3. P. 120–131 [issue contents]

Daria Popova - PhD in Social Policy, Leading Research Fellow at the Independent Institute for Social Policy (IISP), Leading Research Fellow at the Centre for Analysis of Income and Living Standards of the National Research University Higher School of Economics, 101000, 20, Myasnitskaya, Russian Federation; E-mail: dpopova@hse.ru

Abstract

The article discuses development trends, factors and forms of inequality in Russia. The author concludes with recommendations on reducing inequality.

At the beginning of the transition period in the 1990s Russia experienced an abrupt increase in income inequality. In the 2000s the Russian government attempted to take income disparities under control using redistributive policies such as: an accelerated increase in earnings of the public sector workers; a sharp increase in the minimum wage; a series of increases in the average and minimum pensions; and an increase in spending on safety nets for vulnerable groups of the population. Income inequality has stopped growing only recently as a result of the new economic crisis which had a more adverse effect on income of the well-off strata, while incomes of the poor were supported by increases in the minimum wage and several indexations of pensions. However, inequality in Russia, particularly regional, remains high. At the macro-level inequality is caused by the weakness of the tax related redistributive mechanisms, including a flat income tax rate, regressive social security contributions and low property taxes. For example, the total personal income tax and social security contributions in 2010 on average amounted to 43% of net earnings.

At the micro-level, income inequality is a result of disparities in incomes of households with different demographic and socio-economic characteristics. For example, earnings tend to grow with age due to the accumulation of experience and/or improving the match between employees’ skills and employers’ requirements. The family composition has an impact on household incomes; the latter are usually reduced due to the presence of children. Since employment is the main source of livelihood for most households, household incomes are largely determined by the labour market status of the household members. One of the most negative features of the Russian labour market is the high incidence of low-paid employment.

To tackle inequality it is recommended to improve social protection of the most vulnerable social groups, to enhance redistributive capacities of the tax system, to improve citizens’ access to education and health. The package of policies to reduce regional disparities should include policies promoting labor migration, investment in social infrastructure of the depressed territories and subsidies to firms creating new jobs, instead of subsidies to the budgets of those territories.




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Citation: Popova O. D. (2013) Rossiiskaia Federatciia [Russian Federation] INTERNATIONAL ORGANISATIONS RESEARCH JOURNAL, 3 (in Russian)
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