Russian Regional Inequality in Comparative Perspective

That income inequality has a number of social and political effects has been well documented. In view of the rapid rise in interpersonal and interregional inequality in Russia in the past two decades, this paper seeks to answer three questions. First, descriptively, what are the trends in interregional income inequality in Russia and how do they compare to those in China and other large countries? Second, how are interregional and interpersonal inequality related? Finally, how have social and economic policies shaped interregional inequality? The paper compares Russia with China, although it also draws comparisons to inequality in the United States and other large, heterogeneous countries. In both Russia and China, the growth in interregional inequality has levelled off somewhat in the last few years (at least by some measures) but remains high by international standards. Income inequality is fueled by the widening differentials in earnings, a consequence of the economic reform strategies both countries have followed. Territorial centers of growth, particularly metropolitan centers and natural resource-rich regions, experience faster rates of average income growth than rural and peripheral regions, fueling income inequality across regions. Both Russia and China lack significant fiscal redistributive mechanisms, although government policy has mitigated some of the extremes of social and interregional inequality by shoring up incomes at the low end and through targeted government infra-structure investment intended to raise incomes in poorer regions. However, in both countries, the decentralization, commercialization and privatization of public services has reinforced rather than offset inequality generated in the labor market. Social policy in the area of pensions, unemployment and poverty assistance aims at preventing social unrest rather than being a source of broad-based economic growth. I conclude by arguing that the absence of effective mechanisms for aggregating broad social interests and resolving redistributive conflicts, either corporatist or parliamentary, leaves the state poorly equipped to use social policies to redress interpersonal and interregional inequality except through targeted state spending programs.