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­­­The impact of the economic crises on the socio-economic behavior of Russian households

Priority areas of development: economics, sociology
Department: Centre for Longitudinal Studies
The project has been carried out as part of the HSE Program of Fundamental Studies.

Goal of researchis to analyze the socio-economic behavior of households in the context of economic crisis that began in Russia in 2014.

Methodology: quantitative analysis of the data obtained from the series of nationally representative household-based longitudinal surveys "­­­Russia Longitudinal Monitoring Survey of HSE" (RLMS-HSE). The data is collected on an annual basis, which allows observing short-term trends and variations in the socio-economic behavior of households at the different stage of the economic crisis.    

Empirical base of research: "­­­Russia Longitudinal Monitoring Survey of HSE" (RLMS-HSE) database, which combines the data of 26 rounds of the survey collected from 1994 to 2017.

Results of research:

In 2017, the steady recovery of real household income continued. While between 2013 and 2015, an average income dropped by 6.4%, it then grew 11.1% in 2016 and 10.6% in 2017.

Work-related household income rose by 10.6% in 2016 and 11.8% in 2017. In 2017, income from formal employment went up by 7.3% in state-owned enterprises, by 17.6% in privately-owned firms and by 3% in public-private companies. However, those who worked in public-private companies were first to see their income rising since their wages started to grow in late 2015, showing an annual increase of 19.4%.      

Household income from government transfer payments, domestic production, and informal employment continued to grow. In 2017, income from government transfers increased by 6.3%, monetary and in-kind revenue from domestic production along with informal wages went up by 19%, and income from private transfers grew by 7.7%

Since the beginning of the economic crisis in 2014, households became increasingly reliant on government transfer payments as wages accounted for 51.1% of household income in 2011, but only 45% in 2015. On the contrary, the share of government transfers climbed from 35.4 to 42.1% during these years. In 2017, there was a slight uptick in the proportion of wages, – they made up 46% of household income, – while the share of government transfers lowered to 40.9%.

In 2016 and 2017, total household income rose across the entire income spectrum. However, while low-income families experienced a sharper increase in income in 2016, the better-off caught up with them in 2017. In 2017, wealthy families earned 2.9 times more than low-income families did, which was a slight increase compared to 2016, when the income of the wealthy was 2.7 times higher than the income of the poor.

In 2017, household expenditures rose at about the same rate as they did in 2016. However, although total household expenditures went up by 9.3%, the growth in non-food spending slowed down, declining from 10.5% in 2016 to 3.2% in 2017. Nonetheless, the share of food expenditures continued to decrease, from 41.5% in 2016 to 40.2% in 2017.

The spending gap between the wealthy and the poor continued to narrow. While well-off families spent six times more than low-income households in 2016, their expenditures were five times higher than the spending of the poor in 2017.

In 2017, the household possession of consumer durables further increased. Compared to 2016, the proportion of households with a «No-Frost» refrigerator rose from 61.7 to 62.9%, with the latest version of a washing-machine – from 82.7 to 83.9%, with personal computers – from 68.4 to 69.4%. The share of households that own at least one car or a truck remained flat, stabilizing at 45%.

In 2017, the unemployment rate declined from 4.7 to 3.5% in population in general, with unemployment going down from 4.0 to 3.4% for men and from 5.7 to 3.7% for women. The workforce participation rate stood at 81.9% of the adult population. Female retirees were more likely to stay in the workforce than male retirees.

Men continued to outperform women in the labor market. In 2017, the proportion of wage-earners amounted to 79.7% among men and 71.8% among women. Men were more likely to earn their living working in private and public-private enterprises as those companies employed 44.6% of male and only 33.2% of female wage-earners.

In 2017, women earned 70.8% of male work-related income, which was a considerable decrease in comparison to 74.4% in 2016. Although the gender pay gap in private companies remained constant and stood at 74%, the wage disparity was on the rise in state enterprises, with female employees earning 76% of male income in 2015-2016 and only 70% in 2017.  

In 2017, the number of workers who had wage arrears remained at its all-time low at 2.6%. However, a waiting period and an average amount of money due in back pay increased. While there was a 6.4% reduction in 2015-2016, wage arrears rose again in 2016-2017, climbing up by 9.6%.

The share of households struggling to pay rent or utility bills went down from 8.4% in 2015 to 7.9% in 2016 to 7.3% in 2017. While an average amount of money due rose by half in 2015-2016, it went down by 13.6% in 2017.

In 2017, there was a noticeable improvement in reported life satisfaction. While between 2013 and 2016, the proportion of those generally satisfied with their life fell steadily, from 52.4 to 48.1%, it went up in 2017, reaching 51.1%. On the contrary, the share of those unsatisfied dropped back to the 2013 level of 24.2%.

The proportion of those contented with their family financial circumstances rose from 20.2% in 2016 to 23.3% in 2017, while the share of the discontented went down from 60.7 to 57%, respectively. The percentage of respondents reporting declining living standards decreased to 25.0% in 2017 after a steady increase from 15.5 to 31.5% between 2012 and 2016. Conversely, the proportion of those reporting rising living standards went up from 15.4% in 2016 to 18.0% in 2017.

The general outlook on family economic security became a little brighter. Between 2016 and 2017, the proportion of optimists rose from 19.7 to 21.5% but fell short of the 2014 level of 23.6%. The share of pessimists declined from 15.4 to 12.9%.

In 2017, respondents appeared slightly less anxious about losing a job or finding a new one. The share of those concerned about their job security dropped from 65.4% in 2016 to 63.3% in 2017, whereas the percentage of those who felt that their position was reasonably secure rose from 21.8 to 23.7%. The share of those who were optimistic about their chances to find a new job remained stable at 36.9%, so did the percentage of those doubting their employment prospects, which stood at 44%.

In 2017, there were some minor changes in the level of job satisfaction in general and the level of satisfaction with working conditions, pay, and promotion opportunities, in particular. The share of workers who were satisfied with their job went down from 68.2% in 2016 to 66.8% in 2017. However, the percentage of those unsatisfied also decreased from 10.1 to 9.7%.

The economic crisis had no immediate impact on trust in institutions as the level and structure of trust changed little from 2012 to 2017. Men were less likely to trust institutions, compared to women. The level of trust varied little with age, although young people were generally more sympathetic towards institutions in the private sector. Likewise, the level of trust was hardly affected by income since all income groups appeared equally wary of the private sector institutions. The wealthy also expressed some reservations about the state and its institutions.    

Level of implementation,  recommendations on implementation or outcomes of the implementation of the results

The database “Russia Longitudinal Monitoring Survey of HSE” (RLMS–HSE), 1994–2017, with documentation in Russian and English, is publicly available at http://www.hse.ru/rlms.

In 2018, scholars published more than 125 books, book chapters and articles in Russian, English, and Chinese, using the RLMS-HSE database (the full list of publications is available at http://www.hse.ru/rlms/2018).



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