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Understanding Interhousehold Transfers in a Transition Economy: Evidence from Russia

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Disciplines
  • Economics

Abstract

This article uses data from the Russian Longitudinal Monitoring Survey to describe the patterns and determinants of private interhousehold transfers. Russian households have experienced large reductions in income during the post-Soviet transition period, with a particularly severe decline occurring in the fall of 1998. Sharply declining fertility, increasing mortality, and past demographic catastrophes have left a population that is both young (few elderly) and old (one of the oldest working-age populations in the world). Informal networks in Russia are likely to take on distinctive characteristics as the country's economic institutions are underdeveloped and there is a very limited social safety net, while household structure closely resembles that found in much wealthier countries. Although it is often assumed that the elderly in Russia are a highly vulnerable economic group, we actually find that transfers flow strongly from elderly and "empty-nest" households to households in the early part of the life course. This is especially true for older households in rural areas. Descriptive statistical models show a tendency toward increasing net transfer outflow as households age, expressed first through declining transfer receipt and later through increased giving of transfers. Although the tendency toward net transfer outflow slows down for the elderly, we also find that elderly pension income, which proved more consistent through the initial posttransition period than wages or other public transfers, are redistributed to younger households.

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