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Determinants of household housing privatization decision in Russia


Plotnikova, Maria (2004). Determinants of household housing privatization decision in Russia. Master's thesis / Doctoral dissertation.


This dissertation addresses the issue of housing privatization in Russia in the course of the 1990s. Privatization was started as a first step for creation of housing market in order to efficiently allocate resources in the use and production of housing, as well as to phase out the state budget financing of housing. Unlike the other post-socialist countries where housing was sold to the residents at discount prices, in Russia dwellings were offered to their residents free of payment. The research problem that I address in this study is why in Russia in the course of the 1990s not all tenants privatized their dwellings despite the fact that privatization was free. The research objective is to suggest the determinants of household decision to privatize their dwellings. To achieve the research objective first the privatization decision is considered in the light of alternative perspectives of bounded and unbounded rationality. Complexity of privatization decision-choice is illustrated using the Cellular Automata approach. The theoretical model is based on a trade-off between certain value of renting and uncertain value of owning. Using the results of the theoretical model, an empirical model of the privatization decision from the point of view of the household is formulated. The findings of the empirical model are that household characteristics such as education and age affect privatization decision but income does not. Higher quality dwellings are more likely to be privatized. There are also locational effects indicating that place-specific factors such as amenities, municipal policies affect privatization decision. The contribution of this study is that it offers a better understanding of the structural components of the privatization decision. It is also one of the first attempts to formally model the phenomenon of housing privatization from the point of view of the household. This research has important policy implications with respect to housing policies in Russia, and future housing privatization efforts in other countries.

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Plotnikova, Maria