IARIW-HSE Conference: Moscow, September 17 2019 Income Stratification in Modern Russia: Specifics and Dynamics by Svetlana V. Mareeva Comments by Hartmut Lehmann IARIW-HSE Conference: Moscow, September 17 2019

Main focus of the paper Paper focuses on distribution of income stratifying the population into 5 groups: Poor (<=0.5 median income) Vulnerable (between 0.5 and 0.75 of median income) Median group (between 0.75 and 1.25 of median income) Middle class (between 1.25 and 2 of median income) High income group (> 2 of median income) Stratification is done for the years 1994 to 2017 at the country level Stratification at the regional and settlement level only done for 2017

Interesting results (regarding the dynamics of income distribution) The shares of the poor and of the “rich“ have been roughly halved between 1994 and 2017 (when stratification is done by settlement or region in 2017 the shares of these groups are even smaller) There is a “convergence“ towards median and middle class income  on this measure of stratification the income distribution in Russia has become much more equal The share of the vulnerable has remained pretty stable at around 16%

Technical comment 1 In years 1994 – 1996 wage arrears might have a big impact on distribution of income from labor (Lehmann and Wadsworth 2007)- most people only earn income from their labor In these years earnings and hence income is mismeasured (too narrow window with which one observes wages) When estimating a counterfactual distribution without wage arrears income distribution is less unequal The upshot of this: dynamics of stratified income might be somewhat distorted (e.g. the share of the poor is especially high in 1996 – partially due to wage arrears?)

Technical Comment 2 Assuming that one can estimate a relative income distribution at the settlement level using the RLMS, it would be useful to reproduce Figure 1 at the settlement level and compare then these dynamics to the country level dynamics Estimating the distribution at the regional data with RLMS data makes little sense in my opinion (acknowledged by the author) One might be able to use the RLMS data by focusing on high growth regions and low growth regions that are represented in the RLMS (there is a large literature on regional clubs in Russia (high growth vs. low growth) and how their growth performance is spatially correlated)

General Comments 1 From an economist‘s point of view The paper essentially derives the dependent variable and describes its dynamics The paper does not discuss at all the factors that drive the dependent variable For example: Can changes in the educational system explain these dynamics? Can economic policies explain these dynamics? Can the adoption of at-the-frontier technology occurring partially in the economy explain these dynamics? Can the massive reallocation of labor in the wake of the restructuring of the economy explain some of these dynamics?

General comments 2 The results can be interpreted in a positive way or in a negative way Since the 1990s relative poverty has been decreasing substantially (positive) Since the 1990s the share of those with high earnings opportunities have been halved (negative) Where is the Russian economy heading? It looks like towards an equilibrium with not terribly low but relative moderate earnings opportunities for more than half the population At the same time many of the previously high earners are pushed into a lower income category Is Russia unique in this among the “middle income countries with post-socialist characteristics” or do many of these exhibit similar dynamics in their relative income distribution?