Abstract
This paper investigates the microeconomic drivers of short-term income mobility in Russia over the period 1994–2018, focusing on the role of access to credit in triggering household income growth. Controlling for a large set of household-level characteristics and accounting for endogeneity, we provide robust evidence on the positive and significant impact of credit on income growth. We also find that the pro-mobility effect of access to credit is heterogeneous both over time and across household characteristics. Our empirical evidence corroborates the idea that the beneficial impact of credit on income mobility mainly occurs through channels related to the labour market, particularly an increase in labour supply at the intensive margin in the short run and at both the extensive and intensive margins in the longer run.
Article PDF
Similar content being viewed by others
Avoid common mistakes on your manuscript.
Data Availability
The data used in this study are part of the Russian Longitudinal Monitoring Survey (RLMS) and are publicly accessible, upon acceptance of terms and conditions of use, at: https://data.cpc.unc.edu/projects/3/view#public_li
References
Abowd, J.M., Kramarz, F., Margolis, D.N.: High wage workers and high wage firms. Econometrica. 67(2), 251–334 (1999)
Allen, J., Van der Velden, R.: Educational mismatches versus skill mismatches: effects on wages, job satisfaction, and on-the-job search. Oxf. Econ. Pap. 53(3), 434–452 (2001)
Anderloni, L., Bacchiocchi, E., Vandone, D.: Household financial vulnerability: an empirical analysis. Res. Econ. 66(3), 284–296 (2012)
Anzoategui, D., Martínez Pería, M.S., Melecky, M.: Bank competition in Russia: an examination at different levels of aggregation. Emerg. Mark. Rev. 13, 42–57 (2012)
Arestis, P., Demetriades, P.: Financial development and economic growth: assessing the evidence. Econ. J. 107, 783–799 (1997)
Aristei, D., Perugini, C.: The drivers of income mobility in Europe. Econ. Syst. 39, 197–224 (2015a)
Aristei, D., Perugini, C.: Income mobility in the new EU member states. In: Perugini, C., Pompei, F. (eds.) Inequalities During and After Transition in Central and Eastern Europe. Palgrave MacMillan, Basingstoke (2015b)
Atkinson, A.B.: The changing distribution of income: evidence and explanations. Ger. Econ. Rev. 1/1, 3–18 (2000)
Ayala, L., Sastre, M.: The structure of income mobility: empirical evidence from five UE countries. Empir. Econ. 35, 451–473 (2008)
Barisitz, S.: Credit boom in Russia despite global woes—driving forces and risks. In: Financial stability report. Oesterreichische Nationalbank (Austrian Central Bank), 26, pp. 82–99 (2013)
Bartholomew, D.J.: Stochastic Models for Social Processes, 2nd edn. Wiley, London (1973)
Belkar, R., Cockerell, L., Edwards, R.: Labour force participation and household debt. RBA Research Discussion Papers rdp 2007–05, Reserve Bank of Australia (2007)
Berglof, E., Lehmann, A.: Sustaining Russia’s growth: the role of financial reform. J. Comp. Econ. 37, 198–206 (2009)
Besley, T.: Savings, credit and insurance. In: Behrman, J. Srinivasan, T.N. (eds.) Handbook of Development Economics, Ch. 36, vol. III, pp 2123-2207. Elsevier Science B.V., Amsterdam (1995)
Blundell, R., Pistaferri, L., Preston, I.: Consumption inequality and partial insurance. Am. Econ. Rev. 98(5), 1887–1921 (2008)
Bogomolova, T., Tapilina, V.: Income mobility in Russia in the mid-1990s. EERC Working Paper 99/11, Economic Education and Research Consortium Russian Economic Research Program, Moscow (1999)
Borisov, G.V., Pissarides, C.A.: Intergenerational earnings mobility in post-soviet Russia. Economica. 87(345), 1–27 (2020)
Bottazzi, R.: Labor market participation and mortgage related borrowing constraints. The Institute for Fiscal Studies, IFS Working Paper 04/09, IFS (2004)
Bottazzi, R., Low, H., Wakefield, M.: Why do home owners work longer hours? The Institute for Fiscal Studies, Working Paper 10/07, IFS (2007)
Bridges, S., Disney, R., Henley, A.: Housing wealth and the accumulation of financial debt: evidence from UK households. In: Bertola, G., Disney, R., Grant, C. (eds.) The Economics of Consumer Credit. MIT Press, Cambridge (2006)
Bui, K.D., Ume, E.S.: Credit constraints and labor supply: evidence from bank branching deregulation. Econ. Inq. 58(1), 335–360 (2020)
Burkhauser, R.V., Couch, K.: Intragenerational inequality and intertemporal mobility. In: Salverda, W., Nolan, B., Smeeding, T.M. (eds.) Oxford Handbook of Economic Inequality. Ch. 21, pp. 522–548. Oxford University Press, Oxford (2009)
Butrica, B., Karamcheva, N.: (2014). Does household debt influence the labor supply and benefit claiming decisions of older Americans? Netspar Discussion Paper No. 03/2014-083
Calcagnini, G., Giombini, G., Lenti, E.: Gender differences in bank loan access: an empirical analysis. Ital Econ. J. 1, 193–217 (2015)
Card, D., Cardoso, A.R., Heining, J., Kline, P.: Firms and labor market inequality: evidence and some theory. J Labor Econ. 36(S1), S13–S70 (2018)
Commander, S., Tolstopiatenko, A., Yemtsov, R.: Channels of redistribution. Inequality and poverty in the Russian transition. Econ. Transit. 7(2), 411–447 (1999)
Cowell, F.A., Schluter, C.: Income mobility: a robust approach. In: Silber, J. (ed.) Income Inequality Measurement: From Theory to Practice. Kluwer, Dewenter (1999)
Dang, H.A.H., Lokshin, M., Abanokova, K., Bussolo, M.: Welfare dynamics and inequality in the Russian federation during 1994–2015. Eur. J. Dev. Res. 32(4), 812–846 (2020)
De Haan, J., Sturm, J.E.: Finance and income inequality: a review and new evidence. Eur. J. Polit. Econ. 50, 171–195 (2017)
Defusco, A.: Homeowner borrowing and housing collateral: new evidence from expiring price controls. J. Financ. 73(2), 523–573 (2018)
Del Boca, D., Lusardi, A.: Credit market constraints and labor market decisions. Labour Econ. 10(6), 681–703 (2003)
Duncan, G.J.: The implications of changing family composition for the dynamic analysis of economic well-being. In: Atkinson, A.B., Cowell, F.A. (eds.) Panel Data on Incomes. London School of Economics, London (1983)
EBRD (European Bank for Reconstruction and Development): Transition for all: equal opportunities in an unequal world. Transition report 2016–2017. EBRD, London (2016)
Fernández, C., Ortega, C.: Labor market assimilation of immigrants in Spain: employment at the expense of bad job-matches? Span. Econ. Rev. 10(2), 83–107 (2008)
Fields, G.S., Ok, E.A.: The measurement of income mobility: an introduction to the literature. In: Silber, J. (ed.) Handbook of Income Inequality Measurement. Recent Economic Thought, Ch. 19, pp. 557–598. Kluwer Academic Publishers, Boston (1999a)
Fields, G.S., Ok, E.A.: Measuring movement of incomes. Economica. 66, 455–471 (1999b)
Fields, G.S., Cichello, P., Freije, S., Menendez, M., Newhouse, D.: Household income dynamics: a four country study. J. Dev. Stud. 40(2), 30–54 (2003)
Fields, G.S., Duval, H.R., Freije, S., Sanchez Puerta, M.L.: Intragenerational income mobility in Latin America. Economia. 7(2), 101–143 (2007)
Fortin, N.M.: Allocation inflexibilities, female labor supply, and housing assets accumulation: are women working to pay the mortgage? J. Labor Econ. 13(3), 524–557 (1995)
Fräßdorf, A., Grabka, M.M., Schwarze, J.: The impact of household capital income on income inequality—a factor decomposition analysis for the UK, Germany and the USA. J. Econ. Inequal. 9(1), 35–56 (2011)
Fungacova, Z., Solanko, L., Weill, L.: Market power in the Russian banking industry. Int. Econ. 124, 127–146 (2010)
Gimpelson, V.: The labor market in Russia, 2000–2017. IZA World of Labor, p. 466 (2019). https://doi.org/10.15185/izawol.466
Gimpelson, V., Kapeliushnikov, R.: Labor market adjustment: is Russia different? In: Weber, S., Alexeev, M.V. (eds.) The Oxford Handbook of the Russian Economy. Oxford University Press, Oxford (2013)
Gottschalk, P., Smeeding, T.M.: Cross-national comparisons of earnings and income inequality. J. Econ. Lit. 35, 633–687 (1997)
Greenwood, J., Jovanovic, B.: Financial development, growth, and the distribution of income. J. Polit. Econ. 98(4), 942–963 (1990)
Gurvich, E., Vakulenko, E.: Macroeconomic and structural properties of the Russian labor market: a cross-country comparison. Russ. J. Econ. 3(4), 411–424 (2017)
Guseva, A.: Into the Red: The Birth of the Credit Card Market in Post-Communist Russia. Stanford University Press, Palo Alto (2008)
ILO (International Labour Office): Skills Mismatch in Europe. Statistics Brief, Department of Statistics. ILO, Geneva (2014)
ILO (International Labour Office): How Useful is the Concept of Skills Mismatch? Economic and Social Research Institute for the International Labour Organisation, Geneva (2016)
IMF: Household credit growth in emerging market countries. In: Global Financial Stability Report. Market Developments and Issues, Chapter II, pp. 46–73. International Monetary Fund, Washington (2006)
Jäntti, M.: Inequality in five countries in the 1980s: the role of demographic shifts, markets and government policies. Economica. 64, 415–440 (1997)
Jäntti, M., Jenkins, S.P.: Income mobility. In: Atkinson, A.B., Bourguignon, F. (eds.) Handbook of Income Distribution, Volume 2A, Ch. 10, pp. 807–935. North-Holland Elsevier, Amsterdam (2015)
Jauhiainen, S.: Overeducation in the Finnish regional labour markets. Pap. Reg. Sci. 90(3), 573–588 (2011)
Jenkins, S.P.: Trends in UK income distribution. In: Hauser, R., Becker, I. (eds.) The Personal Distribution of Income in an International Perspective, pp. 129–157. Springer, Heidelberg (2000)
Joshi, R., Wooldridge, J.M.: Correlated random effects models with endogenous explanatory variables and unbalanced panels. Ann. Econ. Stat. 134, 243–268 (2019)
Jovanovic, B.: Russian roller coaster: expenditure inequality and instability in Russia, 1994–1998. Rev. Income Wealth. 47, 251–272 (2001)
Kozyreva, P., Kosolapov, M., Popkin, B.M.: Data resource profile: the Russia longitudinal monitoring survey—higher school of economics (RLMS-HSE) phase II: monitoring the economic and health situation in Russia, 1994–2013. Int. J. Epidemiol. 45(2), 395–401 (2016)
Kumarasamy, D., Singh, P.: Access to finance, financial development and firm ability to export: experience from Asia-Pacific countries. Asian Econ. J. 32(1), 15–38 (2018)
Layard, R., Richter, A.: Labour market adjustment—the Russian way. In: Aslund, A. (ed.) Russian Economic Reform at Risk, pp. 119–148. Pinter, London (1995)
Levine, R.: Finance and growth: theory and evidence. In: Aghion, P., Durlauf, S. (eds.) Handbook of Economic Growth, pp. 865–933. Elsevier, North-Holland, Amsterdam (2005)
Lokshin, M., Ravallion, M.: Household income dynamics in two transition economies. Stud. Nonlinear Dyn. Econ. 8(3), Article 4 (2004)
Lukiyanova, A., Oshchepkov, A.: Income mobility in Russia (2000–2005). Econ. Syst. 36(1), 46–64 (2012)
MacKinnon, J.G.: How cluster-robust inference is changing applied econometrics. Can. J. Econ. 52(3), 851–881 (2019)
MacKinnon, J.G., Webb, M.D.: When and How to Deal with Clustered Errors in Regression Models. Working Paper 1421. Economics Department, Queen’s University, Kingston (2020)
Mitra, P., Yemtsov, R.: Increasing inequality in transition economies: is there more to come? In: Bourguignon, F., Pleskovic, B. (eds.) Annual World Bank Conference on Development Economics—Regional 2007: Beyond Transition, pp. 59–102. World Bank, Washington, DC (2007)
Nissanov, Z.: Income mobility and the middle class in Russia, 1995–2007. Post-Communist Econ. 29(2), 250–264 (2017)
Novokmet, F., Piketty, T., Zucman, G.: From soviets to oligarchs: inequality and property in Russia 1905–2016. J. Econ. Inequal. 16, 189–223 (2018)
OECD: Job Creation and Local Economic Development 2016. OECD Publishing, Paris (2016). https://doi.org/10.1787/9789264261976-en
Ortiz, L., Kucel, A.: Do fields of study matter for over-education? The cases of Spain and Germany. Int. J. Comp. Sociol. 49(4–5), 305–327 (2008)
Perugini, C.: Patterns and drivers of household income dynamics in Russia: the role of access to credit. BOFIT Discussion Paper 11/2020, Bank of Finland, Institute for Economies in Transition (2020)
Pijoan-Mas, J.: Precautionary savings or working longer hours? Rev. Econ. Dyn. 9(2), 326–352 (2006)
Ravallion, M.: Inequality and globalization: a review essay. J. Econ. Lit. 56(2), 620–642 (2018)
Roodman, D.: Estimating fully observed recursive mixed-process models with cmp. Stata J. 11, 159–206 (2011)
Rossi, M., Trucchi, S.: Liquidity constraints and labor supply. Eur. Econ. Rev. 87, 176–193 (2016)
Schooley, D.K., Worden, D.D.: Fuelling the credit crisis: who uses consumer credit and what drives debt burden? Bus. Econ. 45(4), 266–276 (2010)
Schoors, K.: The fate of Russia's former state banks: chronicle of a restructuring postponed and a crisis foretold. Europe-Asia Stud. 55(1), 75–100 (2003)
Shorrocks, A.: The measurement of mobility. Econometrica. 46, 1013–1024 (1978a)
Shorrocks, A.: Income inequality and income mobility. J. Econ. Theory. 19, 376–393 (1978b)
Simanovskiy, A., Morozov, A. Sinyakov, A., Porshakov, A. Pomelnikova, M., Ushakova, Y., Markelov, V., Bezdudniy, M.: The 2008–2017 decade in the Russian banking sector: trends and factors. Bank of Russia Working Paper Series wps31, Bank of Russia (2018)
Solanko, L.: The Russian Banking Sector—Where to Next? Bank of Finland Articles on the Economy (2017)
Tompson, W.: Banking Reform in Russia: Problems and Prospects. Economics Department Working Papers, 410. OECD, Paris (2004)
Vernikov, A.: Measuring institutional change: the case of the Russian banking industry. J. Inst. Stud. 9(2), 119–136 (2017)
Woolard, I., Klasen, S.: Determinants of income mobility and household poverty dynamics in South Africa. J. Dev. Stud. 41(5), 865–897 (2005)
Yadav, R.: Twenty five years of Russian banking system, trends and analysis. Int. Stud. 51(1–4), 101–117 (2017)
Zanin, L.: Determinants of the conditional probability that a household has informal loans given liquidity constraints regarding access to credit banking channels. J. Behav. Exp. Financ. 13, 16–24 (2017)
Acknowledgements
A preliminary version of this paper was developed while Cristiano Perugini was a visiting researcher at the Bank of Finland Institute for Economies in Transition (BOFIT). Comments and suggestions by Zuzana Fungáčová, Mikko Mäkinen, Risto Herrala, Laura Solanko, Olga Kuzina and the seminars participants at BOFIT and at the Higher School of Economics (Moscow) are gratefully acknowledged. We are thankful to the editor, Garcia-Peñalosa, and three anonymous reviewers for providing very valuable comments and suggestions on previous versions of the manuscript.
Funding
Open access funding provided by Università degli Studi di Perugia within the CRUI-CARE Agreement.
Author information
Authors and Affiliations
Corresponding author
Ethics declarations
Conflict of interests/competing interests
The authors have no conflicts of interest to declare that are relevant to the content of this article.
The authors have no relevant financial or non-financial interests to disclose.
Additional information
Publisher’s Note
Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.
Supplementary Information
ESM 1
(DOCX 111 kb)
Rights and permissions
Open Access This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. The images or other third party material in this article are included in the article's Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the article's Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. To view a copy of this licence, visit http://creativecommons.org/licenses/by/4.0/.
About this article
Cite this article
Aristei, D., Perugini, C. Credit and income mobility in Russia. J Econ Inequal 20, 639–669 (2022). https://doi.org/10.1007/s10888-022-09525-x
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s10888-022-09525-x