Increasing Inequality in Russia

An exposition in graphs

and maps

A Presentation atThe Department of Government

The University of Texas at AustinFebruary 26, 2004

byJames K. Galbraith

Ludmila Krytynskaia

The University of Texas Inequality Project

http://utip.gov.utexas.edu

We gratefully acknowledge the support of the Ford Foundation

The U.T. Inequality Project

• Measures Global Pay Inequality

• Uses Simple Techniques that Permit Up-to-Date Measurement at Low Cost

• Shows How Inequality Has Risen Under Globalization

• Is Developing National and Regional Data Sets for Many Countries

• Estimates Global Income Inequalities

We use Theil’s T statistic, measured across sectors within each country, region or province, to show the evolution of economic inequality.

The components of the statistic provide a measure of the contribution of each “province-sector cell” to inequality. This measure takes account both of the relative income of the cell and its size in relation to the whole employed population.

The method permits us to map changes in the flow of incomes across regions and across sectors very accurately through time, using national data sources & without relying on sample surveys.

General Technique

T p R R p R T

Tn

r r

j jj

m

j jj

m

j j

jj

ii g

i

j

1 1

1

log

log

pn

njj R j

j

Y

A brief review of the Theil Statistic:

n ~ employment; mu ~ average income; j ~ subscript denoting group

“The Theil Element”

Russia

0

0.01

0.02

0.03

0.04

0.05

0.06

19901991199219931994199519961997199819992000

RegionalSectoral

Inequality Trends in Russia, 1990-2000

This figure shows the evolution of inequality in Russia measured across regions and across sectors. Note that the increases across regions are larger.

Source data are from Goskomstat; Calculations by L. Krytynskaia.

-0.08

-0.06

-0.04

-0.02

0

0.02

0.04

0.06

0.08

0.1

Contr

ibution to Inequality

T'90 T'91 T'92 T'93 T'94 T'95 T'96 T'97 T'98 T'99 T'00Year

Agriculture Trade and food services Education Health, sporting and social services

Culture and arts Housing Communication Science

Management Finance, credit and insurance Construction Transportation

Industrial Production

Theil Elements -- RussiaBy Sector

A stacked bar chart of Theil elements can show the changing contribution of each sector to inequality over time; values above zero indicate above-average incomes, and conversely…

Industry

Agriculture

Finance

Transport

Education

-0.1

-0.05

0

0.05

0.1

0.15

Con

trib

utio

n to Ine

qua

lity

T'90 T'91 T'92 T'93 T'94 T'95 T'96 T'97 T'98 T'99 T'00

Year

Theil Elements - RussiaBy Region

Moscow

Tiumen

Khanty-Mansy

Maps provide a useful way to visualize the increasing regional polarization of income. High values (yellow to red) indicate concentrations of relative wealth, low values (light \

to dark blue) show concentrations of relative poverty.

1990

1994

1998

ImpoverishedFar Below AverageBelow AverageLow low NeutralLow NeutralNeutralHigh NeutralAbove AverageProsperousWealthy

2000

Important Note: These measures do not take account of relative changes in the regional cost of living.

Stacked Plot ( 88v*14c)

AG TS ED HS CA FO CM HO SC MG FI TR CT IP-0.02

-0.01

0.00

0.01

0.02

0.03

0.04

0.05

2000

These stacked line graphs show the contribution to inequality in Russia of each sector in each region. Two facts emerge clearly: the general decline of agriculture, education and health in all regions, and the rise of industrial production (energy), construction, transport and finance in a very few specific regions.

Note that in 2000 the bottom of the income structure is marked by agriculture; finance meanwhile has moved up past management and science.

ED HS TS HO CA AG CM FO FI SC MG TR IP CT-0.02

-0.01

0.00

0.01

0.02

0.03

0.04

0.05

1990

For more information:

The University of Texas Inequality Project

http://utip.gov.utexas.edu

Type “Inequality” into Google to find us on the Web