Skip to main content

Labor market outcomes and household welfare in an economy in transition: Russia, 1993–1998


Jovanovic, Branko (2001). Labor market outcomes and household welfare in an economy in transition: Russia, 1993--1998. Master's thesis / Doctoral dissertation.


The transition towards the market economy in Russia undoubtedly affected lives of many. This research looks into three main indicators of economic well being--expenditure, income and wages--to assess the fate of individuals and families during the transition. The first essay investigates the changes in expenditure inequality and instability between of 1994 and of 1998, using the Russian Longitudinal Monitoring Survey. Although the expenditure distribution has remained stable in spite of the economic and political turmoil Russia has been going through, the individual household's expenditure has been quite unstable. The measured level of expenditure mobility is very high, suggesting that expenditure instability is also high. While mobility is often viewed as favorable, high instability may affect the incentives of Russians to support economic reforms, to acquire human capital, and to undertake entrepreneurial activities. The second essay analyzes how the decline in real income affected people's perception of the minimum level of income needed to make ends meet. Individual level data collected from repeated surveys between March 1993 and September 1996 reveal people's subjective estimate of the minimum income for an adult Russian fell about 1.7 percent each month. This sharp reduction, in the face of a decrease in real income, caused the percentage of the population who felt that they were poor to decline, even though poverty remained at a very high level. The third essay investigates the wage differentials between the state and the private sector in the city of Moscow, using the 1997 Russian Labor Force Survey. Despite the higher experience and the presence of more highly educated individuals in the state sector, earning differences are quite substantial and in favor of the private sector employees. Using the regressions model, I estimate the wage gap to be 14 percent for men and 18 percent for women. Age-earnings profiles for all education and experience groups show higher average wages in the private sector at any age. The results suggest that for employees with two or fewer years of tenure, the state sector might have been the employer of last resort.

Reference Type


Year Published



Jovanovic, Branko