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Assessment of economic, social and demographic policies for cutting poverty in half by 2024

Priority areas of development: economics, management
2019

The object of the study is Russian population.

Goal of research

Analysis of poverty level, profiles and structure and evaluation of policy measures sufficiency halve the poverty.

Methodology

Analysis of open data of international organizations (World Bank, OECD) is used for cross-country comparison of poverty level and dynamics; open data of Federal State Statistic Service is used for comparative  analysis of poverty level in some Russian regions; one-dimensional and multi-dimensional data distributions of answers collected during longitudal and cross-sectional surveys are used to evaluate poverty dynamics, poverty factors, peculiarities of poverty in certain regions and to compare income-based and expenditure-based approach for identification of poor; mathematical modelling is used to evaluate the effect of economic growth and social policy measures on poverty reduction and the influence of composition of shopping basket on poverty level; analysis of legal acts and other general documents is used to characterize the provisions of the Order about the regional pilot projects aimed at poverty reduction.

Empirical base of research

The data of Russian Longitudinal Monitoring Survey (RLMS) from 2000 to 2017; the data of  Statistical Survey of Income and Participation in Social Programs (VNDN) conducted in 2017;the data of  Comprehensive Monitoring of Living Conditions (KOUZH) conducted in 2016; the data of  Household Budget Survey (HBS) conducted in 2015; the data of Selective Supervision of Quality and Availability of Services in Education, Health Care and Social Service, Assistance of Employment of the Population (KDU) conducted 2017; the data of World Bank and OECD concerning the level of poverty and GDP from 2000 to 2017; open data ofFederal State Statistic Service and other organizations that provide the relevant information.

Results of the research

Poverty reduction from 13,2% in 2017 to 6,6% in 2024 is among National Development Goals in Russia. Our country already had an experience of halving poverty: the figure was reduced from 29,0% in 2000 to 15,2% in 2006. It was done primarily through lifting retirees and one-child families out of poverty. Nowadays this scenario couldn’t be repeated. And already existing policy measures are not enough to achieve the target poverty level. The increase in the share of poor population that started in 1st half of 2019 proves their insufficiency.

The results of cross-country comparison that was based on World Bank and OECD data, show that economic growth is one of the core factors of poverty reduction. But the evaluation that was made using VNDN-2017 data, demonstrates that its influence is not enough to achieve target poverty level. According to the calculations the share of poor population can be decreased only to 9,9% by 2024 through the economic growth (changes in structure of population by age and gender and changes in retirement age are also included in model), that highlights the necessity of new social policy measures.

Measures of social support aimed at poverty reduction lay in three fields: in the area of labor market, education and social benefits. Analysis of measures oriented towards income increase shows that most of them can have only weak direct or indirect effect on poverty level. Moreover some of the can only support figures that were already achieved. Total effect of all considered measures can contribute only 0,2 percentage points and poverty level will be decreased to 9,7%.

Due to the lack of information about implementation scheme and sources of finance, such measure as state social contract was not included in modelling. In 2019 its various aspects were considered on both federal and regional levels, mainly in regional pilot projects aimed at poverty reduction. Such pilot projects were extended to 10 regions (8 of them were included initially and 2 more joined later), that have different poverty indicators: from 40,5% in 2017 for Tyva Republic to 7,4% in Tatarstan Republic. Nowadays significant progress has been made in social contract development; main directions of its implementation are identified: job search and employment assistance, professional education and additional professional training assistance, assistance in running individual entrepreneurship and other steps to overcome hard life situation.

Besides work on propositions about measures of social support, the members of pilot projects conducted the analysis of income and poverty level in regions, paid attention to creating the Register of poor population, issues of working with State Social Security System (EGISSO) and described the specificities of work with disabled people and those who take care of them.

The importance of social contract is also evident in the sense of poor population profiles and poverty factors.  In Russia as well as in certain regions the share of poor is higher among households with unemployed labour. Risks of poverty are also high for families with children and people without higher education and for those who live in rural areas.

Calculation of poverty factors that describe main problems that poor families face complement the description of poverty profiles. Consideration of such factors as low level of human capital of household members, poor capitalization of human capital, having children under 15 years old, lack of labor income and weak social protection, demonstrates that lack of return on knowledge and skills (i.e. education level) that Russian population have is the most wide-spread problem. For poor people in Russia in the whole and majority of pilot regions the main problem is the lack of money to satisfy the needs of children and parents. More than half of poor families in regions also suffer from inability of social policy measures to increase their income per capita to subsistence level.

Analysis of changes in poor population structure based on RLMS data shows the impossibility to overcome poverty problem totally: the people whose income fell below the subsistence level only in current year form annually up to one third of poor population. Besides this, the chronic poverty is growing (being poor for two and more years). This tendency is seen for two-year and three-year intervals.

Profiles of chronically poor households are similar to profiles of poor population in general. Among those who cannot get out of poverty in short period are families with children, single parents, households with unemployed labor and rural citizens.

Analysis of subsistence level calculation methodology makes evident the inconsistency of shopping basket composition with principles of healthy diet and dependency of its cost  on the sample of shops where the prices for analysis are collected. When non-food part of subsistence level is considered, some services are supposed to be free and ratio of food and non-food parts of shopping basket does not correspond with actual consumption structure, which also puts the methodology under question. Changes of shopping basket composition and price in accordance with food norms prepared by the Ministry of Health cause the increase in subsistence level. When food norms by the Ministry of Health are adopted the subsistence level for Russia in general in 2016 for population in employment age achieves 13 136,6 rubles (while existing subsistence level was 10 957,5 rubles for 2016). When food norms are complemented by actual consumption structure of poorest people (its evaluation is based on HBS-2015), the subsistence level increases up to 13 447,1 rubles for population in employment age. When the methodology used in the USA (cost of shopping basket is calculated as tripled food part) is adopted the subsistence level achieves 17 420,5 rubles. As it was shown above, according to the evaluation based on VNDN-2017, if current methodology of subsistence level calculation is used the share of poor population will reduce to 9,9% by 2024 (under the influence of economic growth, without new measures), the usage of the Ministry of Health food norms results in 19% of poor by 2024, adding the USA methodology ratio causes the 32,5% of poor population in 2024.

Comparative analysis of income and expenditures indicators usage for poverty level and profiles calculation based on RLMS-2017 data demonstrates that expenditure-based approach shows higher share of poor population than income-based approach. But using the indicator of “monetary income per capita” changes poverty profiles only for retired. Poverty measured by expenditures is higher for households with retired people. And those families with retired who are not poor according to income-based approach are poor when expenditures-based approach is  used.

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

Some results of the study were used in the preparation of analytical notes and expert opinions in 2019, as well as presented at various scientific and practical events. The results of this work can be used to advise public authorities how to fight with poverty and to develop the methodology for further studies of poverty in contemporary Russia.