This paper finds that informal workers are more likely to have inferior work conditions, but do not necessarily report worse subjective well-being.
... See More + Starting with lower wages, but also with less regularity of hours and paid vacation, informal workers have higher incidence of envelope payments than formal workers but not of hazardous or unstable jobs. After controlling for work conditions, informal workers do not have statistically significantly lower job satisfaction and under no specification are informal workers more likely to self-assess worse health than formal workers. Finally, there is some association between informal employment and household poverty and life satisfaction, but it is not robust to changes in econometric specification or sample composition. The authors conclude that the evidence indicates that informal employment in the Russian Federation is mostly a problem of labor productivity and the design of the social protection system, but worsening wages and some association between informality and household poverty indicate that informality may also be a social equity problem.
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Policy Research Working Paper WPS8989 AUG 20, 2019
This study aims to answer a simple question: what the impact on poverty rates due changes in consumer prices because of changes in market structure of selected goods in Russia will be.
... See More + It uses WELCOM (Welfare and Competition), a statistical software interface for Stata, developed at the World Bank- that enables the estimation of potential distributional effects of changes in market competition through changes in consumer prices. Section two gives a summary of the academic underpinnings of this analysis. Section three describes restrictions to market competition in Russia, while section four describes the methods and data used. Section five summarizes the results and section six concludes.
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Real GDP growth in Russia surpassed expectations in 2018, reaching 2.3 percent, mostly due to one off effects of energy construction. Forecasted growth of 1.2 percent in 2019 and 1.8 percent in 2020 and 2021 reflects a more modest outlook.
... See More + Russia’s macro-fiscal buffers remain strong, with fiscal surpluses across all tiers of government and low public-debt levels. When compared to advanced economies, Russia spends less on health and education. Rebalancing in favor of these categories could improve the overall efficiency of public spending. Short-term inflationary risks have abated, with the Bank of Russia signaling a return to a neutral policy rate. Lending activity is recovering, but the banking sector remains afflicted with high concentration and state dominance. Having eased slightly, the poverty rate remains in double digits with many households close to the poverty line and lacking formal employment. Informal employment is rising in the face of close-to-zero net job creation by medium-sized and large formal enterprises. Key risks to medium-term growth include the expansion of economic sanctions, renewed financial turmoil in EMDEs, a dramatic drop in oil prices, and souring of the global trade environment. The recent double-digit expansion in household credit may also pose a risk to financial stability in the case of a deterioration in the macroeconomic environment.
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Working Paper (Numbered Series) 137997 JUN 01, 2019
Sanghi,Apurva; Emelyanova,Olga; Matytsin,Mikhail; Rostovtseva,Irina; Levitanskaya,Katerina; Gutierrez,Eva M.; Okawa, Yoki; Nagle,Peter Stephen Oliver; Wheeler,Collette MariDisclosed
Despite the significant progress Ukraine made on its structural reform agenda, social assistance reform remains a key priority in the face of high levels of poverty (estimated at 27 percent according to the World Bank (WB) methodology, 2016 data) and continuing fiscal pressures.
... See More + The modernization of the safety-net can provide much more effective welfare support to the population while consuming fewer fiscal resources. The key to this approach is fiscal consolidation and rebalancing of the fiscal resources from housing utilities subsidy (HUS) to minimum income support (GMI) for improved targeting of social safety net spending. This will entail a gradual contraction of the HUS and, the expansion of the GMI, and the integration of some child benefits such as the single mother benefit into the GMI. Such integration of support is expected to improve targeting of social spending, reduce fiscal pressures, improve benefits for poor households, simplify the system, standardize rules, and discourage welfare dependency. The end-goal for the reform is to develop a system that supports more equitable distribution of welfare expenditures, with the GMI playing a central safety net role, and HUS playing a smaller complementary role to support energy affordability for most vulnerable groups.
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Incoming data confirms that global growth lost momentum in 2018, driven by a noticeable deceleration in both advanced economies and emerging market and developing economies (EMDEs).
... See More + The loss of momentum was particularly pronounced in manufacturing amid signs of softening global investment and trade. The global manufacturing PMI suggests continued weakness in January and February 2019, with the index falling to its lowest level since mid-2016. After rising 8 percent in February, crude oil prices continued to increase in March this year: The price of Brent, the international marker, reached $68/bbl by the middle of the month, and WTI, the U.S. benchmark, increased to $58/bbl. In February, the Russian ruble gained 2.2 percent compared to the previous month, supported by the easing of global financing conditions, higher oil prices, and a relatively lower risk perception. Russia’s economic growth was weak in January with output in five basic sectors1 increasing by 0.2 percent, y/y, compared to a 1.9 percent growth, y/y, in December 2018. In February, annual consumer inflation accelerated to 5.2 percent, y/y, up from 5.0 percent, y/y, in January. Monthly inflation growth decelerated across all categories in February, sa, as January experienced the most intense VAT-pass-through effect. Labor market dynamics were stable in January, and real wages continued to grow but only increased by 0.2 percent compared to the same period in 2018. The federal budget balance improved in January compared to the same period last year on the back of stronger non-oil revenues. Credit expansion continued into 2019, but the fast-paced expansion in household credit could pose a risk to financial stability if the macroeconomic environment were to deteriorate. Key credit risk and performance indicators remained largely stable in early 2019.
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The paper employs the Commitment to Equity framework to present a first attempt at a comprehensive fiscal incidence analysis for Ukraine, encompassing the revenue and expenditures components of the fiscal system, including direct and indirect taxes, as well as direct, indirect, and in-kind transfers.
... See More + The fiscal system in Ukraine has high redistribution effects, decreasing the Gini inequality index by 21 percentage points, and the official measure of poverty incidence by 27.6 percentage points (considering all fiscal interventions including in-kind transfers). As in many other countries in the region, pensions are the main contributor to the redistribution effect of fiscal policy. However, Ukraine stands out due to the relatively high equalizing effect of direct transfers. Fiscal policy in Ukraine is pro-poor, with the lowest income decile benefiting the most. Overall, 60 percent of the population of Ukraine are net recipients from the fiscal system, the main categories of recipients being households with two or more children, single-parent households, and retirees.
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Working Paper (Numbered Series) 135124 MAR 06, 2019
The paper employs the Commitment to Equity framework to present a first attempt at a comprehensive fiscal incidence analysis for Ukraine, encompassing the revenue and expenditures components of the fiscal system, including direct and indirect taxes, as well as direct, indirect, and in-kind transfers.
... See More + The fiscal system in Ukraine has high redistribution effects, decreasing the Gini inequality index by 21 percentage points, and the official measure of poverty incidence by 27.6 percentage points (considering all fiscal interventions including in-kind transfers). As in many other countries in the region, pensions are the main contributor to the redistribution effect of fiscal policy. However, Ukraine stands out due to the relatively high equalizing effect of direct transfers. Fiscal policy in Ukraine is pro-poor, with the lowest income decile benefiting the most. Overall, 60 percent of the population of Ukraine are net recipients from the fiscal system, the main categories of recipients being households with two or more children, single-parent households, and retirees.
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Policy Research Working Paper WPS8765 MAR 05, 2019
Are taxes in Ukraine progressive? Do social protection programs in Ukraine help reduce poverty and inequality? Which programs are more effective in alleviating poverty, per hryvnia allocated to them?
... See More + These are the questions that a recent Commitment to Equity (CEQ) analysis for Ukraine aims to address. This brief lays out the main aspects of the CEQ approach, and the main results. The analysis finds, for instance, that household at the bottom of the income distribution derive most of their final income from transfers of various types. The tax benefit system overall is quite progressive and contributes significantly to the reduction of poverty and inequality. However, not all programs are equally efficient in reducing poverty and inequality. Direct transfers, in particular means-tested poverty benefits, as well as child benefits have larger poverty and inequality impact per hryvnia allocated to them, then some of the indirect subsides. Efficiency of HUS depends on the choice of the poverty threshold. There is room for improvement in program design.
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Incoming data confirms that global growth lost momentum in 2018, driven by a noticeable deceleration in both advanced economies and emerging market and developing economies (EMDEs).
... See More + The loss of momentum was particularly pronounced in manufacturing amid signs of softening global investment and trade. The global manufacturing PMI suggests continued weakness in January and February 2019, with the index falling to its lowest level since mid-2016. After rising 8 percent in February, crude oil prices continued to increase in March this year: The price of Brent, the international marker, reached dollar 68/bbl by the middle of the month, and WTI, the U.S. benchmark, increased to dollar 58/bbl. In February, the Russian ruble gained 2.2 percent compared to the previous month, supported by the easing of global financing conditions, higher oil prices, and a relatively lower risk perception. Russia’s economic growth was weak in January with output in five basic sectors1 increasing by 0.2 percent, y/y, compared to a 1.9 percent growth, y/y, in December 2018. In February, annual consumer inflation accelerated to 5.2 percent, y/y, up from 5.0 percent, y/y, in January. Monthly inflation growth decelerated across all categories in February, sa, as January experienced the most intense VAT-pass-through effect. Labor market dynamics were stable in January, and real wages continued to grow but only increased by 0.2 percent compared to the same period in 2018. The federal budget balance improved in January compared to the same period last year on the back of stronger non-oil revenues. Credit expansion continued into 2019, but the fast-paced expansion in household credit could pose a risk to financial stability if the macroeconomic environment were to deteriorate. Key credit risk and performance indicators remained largely stable in early 2019.
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The global economy has continued to decelerate, growing by an estimated 2.3 percent in 18Q3 (q/q saar), down substantially from 3.3 percent in the previous quarter.
... See More + This was driven by the slowdown in the Euro Area and Japan. Oil prices rose 4.9 percent (m/m) in January 2019, and they continued to rise, with the price of Brent crude oil reaching 64/bbl US Dollars by mid-February. The ruble nominal exchange rate stayed flat in January compared to the previous month. Russia’s current account surplus shrank in January, compared to the same period last year, on the back of lower oil prices. In 2018, supported by robust global growth, rising oil prices, one-off construction projects and the FIFA World Football Cup, GDP growth in Russia accelerated to 2.3 percent, up from 1.6 percent in 2017 (consensus: 1.7 percent). Labor market dynamics were stable in December 2018. In 2018, the federal budget surplus (on a cash basis) totaled 2.7 percent of GDP compared to a 1.4 percent of GDP deficit in 2017. Key credit risk and performance indicators remained largely stable in November. Reshaping of the banking sector continues due to the ongoing sector clean-up by the Central Bank of Russia and the evolving regulatory landscape.
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Correspondence 136242 FEB 01, 2019
Rostovtseva,Irina; Okawa,Yohei; Matytsin,Mikhail; Nagle,Peter Stephen Oliver; Emelyanova,Olga; Sanghi,Apurva; Levitanskaya,Katerina; Baffes,JohnRussianDisclosed
The global economy has continued to decelerate, growing by an estimated 2.3 percent in 18Q3 (q/q saar), down substantially from 3.3 percent in the previous quarter.
... See More + This was driven by the slowdown in the Euro Area and Japan. Oil prices rose 4.9 percent (m/m) in January 2019, and they continued to rise, with the price of Brent crude oil reaching 64/bbl US Dollars by mid-February. The ruble nominal exchange rate stayed flat in January compared to the previous month. Russia’s current account surplus shrank in January, compared to the same period last year, on the back of lower oil prices. In 2018, supported by robust global growth, rising oil prices, one-off construction projects and the FIFA World Football Cup, GDP growth in Russia accelerated to 2.3 percent, up from 1.6 percent in 2017 (consensus: 1.7 percent). Labor market dynamics were stable in December 2018. In 2018, the federal budget surplus (on a cash basis) totaled 2.7 percent of GDP compared to a 1.4 percent of GDP deficit in 2017. Key credit risk and performance indicators remained largely stable in November. Reshaping of the banking sector continues due to the ongoing sector clean-up by the Central Bank of Russia and the evolving regulatory landscape.
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Correspondence 136242 FEB 01, 2019
Rostovtseva,Irina; Okawa,Yohei; Matytsin,Mikhail; Nagle,Peter Stephen Oliver; Emelyanova,Olga; Sanghi,Apurva; Levitanskaya,Katerina; Baffes,JohnEnglishDisclosed
In the second half of 2018, despite robust activity in the United States, there was a slowdown in global growth, which reached an almost three-year low of 2.4 percent (q/q saar) in 18Q3.
... See More + The subdued momentum persisted in 18Q4 with the global manufacturing PMI ending the year at a 27-month low. After falling almost 20 percent in November 2018, oil prices declined by an additional 13 percent in December. The drop in prices was driven by ongoing concerns of oversupply as well as weakening prospects for global demand in 2019, particularly in China. While the oil price tumbled in December, the ruble nominal exchange rate depreciated moderately. On the back of turbulence in the emerging markets and elevated geopolitical tensions, net capital outflows in 2018 reached about 4.8 percent of GDP (USD 72.1 billion), the highest reading since 2014. In November 2018, there was a slowdown in growth momentum in Russia, with agricultural production dropping and growth in industry slowing. Labor market dynamics were stable in November. December readings of consumer inflation slightly exceeded expectations (3.8 – 4.2 percent) interval according to the CBR forecast) and the 4 percent inflation target. The federal budget registered a surplus of 3.7 percent of GDP in the first eleven months of 2018.
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Correspondence 136282 JAN 29, 2019
Rostovtseva,Irina; Matytsin,Mikhail; Nagle,Peter Stephen Oliver; Emelyanova,Olga; Sanghi,Apurva; Levitanskaya,Katerina; Baffes,John; Okawa,YokiEnglishDisclosed
In the second half of 2018, despite robust activity in the United States, there was a slowdown in global growth, which reached an almost three-year low of 2.4 percent (q/q saar) in 18Q3.
... See More + The subdued momentum persisted in 18Q4 with the global manufacturing PMI ending the year at a 27-month low. After falling almost 20 percent in November 2018, oil prices declined by an additional 13 percent in December. The drop in prices was driven by ongoing concerns of oversupply as well as weakening prospects for global demand in 2019, particularly in China. While the oil price tumbled in December, the ruble nominal exchange rate depreciated moderately. On the back of turbulence in the emerging markets and elevated geopolitical tensions, net capital outflows in 2018 reached about 4.8 percent of GDP (USD 72.1 billion), the highest reading since 2014. In November 2018, there was a slowdown in growth momentum in Russia, with agricultural production dropping and growth in industry slowing. Labor market dynamics were stable in November. December readings of consumer inflation slightly exceeded expectations (3.8 – 4.2 percent) interval according to the CBR forecast) and the 4 percent inflation target. The federal budget registered a surplus of 3.7 percent of GDP in the first eleven months of 2018.
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Correspondence 136282 JAN 25, 2019
Rostovtseva,Irina; Matytsin,Mikhail; Nagle,Peter Stephen Oliver; Emelyanova,Olga; Sanghi,Apurva; Levitanskaya,Katerina; Baffes,John; Okawa,YokiRussianDisclosed
This Second Programmatic Public Finance Review (PFR-2) supports Ukraine in implementing its ongoing ambitious structural reform agenda to identify fiscal savings and to increase the effectiveness of public services.
... See More + Emerging from the severe economic crisis of 2014-2015, Ukraine managed to achieve significant fiscal consolidation. However, this was mostly driven by ad hoc measures rather than sustainable structural-fiscal reforms. Fiscal pressures – notably from public sector wages and social welfare spending, have therefore reemerged in the period from 2016 to 2018. General government expenditure is budgeted to increase from 40.6 percent of gross domestic product (GDP) to 44.2 percent in 2018. Despite growing expenditures of an already large public sector, its performance remains poor, and Ukraine has initiated an ambitious reform agenda to address these challenges. This PFR aims to support Ukraine in implementing this ongoing reform program to increase the effectiveness of the public sector and to strengthen fiscal sustainability. The first pillar of this report identifies measures to contain wage bill pressures and make public services more efficient, with a focus on public administration and the education and health sectors. The second pillar of this report assesses the fiscal sustainability of the social protection system and identifies reforms to make expenditure more effective by focusing on social assistance and pensions. This report builds on the World Bank’s and other international partners’ ongoing engagement in Ukraine to support macro-fiscal stability. This PFR series aims to support Ukraine in safeguarding the fiscal sustainability that was restored after the deep economic crisis of 2014-2015. This was achieved in part through the Multisector and Financial Sector Development Policy Loans (DPLs) provided through the World Bank, the International Monetary Fund (IMF) Extended Fund Facility (EFF) and European Union (EU) budget assistance. The PFR-2 also builds on a previous analytical report prepared by the World Bank in Ukraine, the PFR-1 2017, which analyzed reform options in the areas of: (i) social assistance, (ii) pensions, (iii) health, (iv) education, and (v) tax policy and administration. The PFR-2 updates and extends this analysis after the significant legislative progress made by Ukraine in 2017. This report identifies measures to address the short-term pressures and proposes structural measures for ensuring a sustainable fiscal stance in the medium term.
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Despite the well-known positive effects of tobacco taxes on health outcomes, policy makers avoid relying on such taxes because of their possible regressive impact.
... See More + Using an extended cost-benefit analysis to estimate the distributional effect of cigarettes in the Russian Federation, this paper finds that the long-run impact may in fact be progressive. The methodology applied incorporates the negative price effect caused by an increase in tobacco taxes, combined with a presumed future reduction in medical expenditures and a rise in working years caused by a reduction in the rate of smoking among the population. The analysis includes estimates of the distributional impacts of price rises on cigarettes under various scenarios, based on information taken from the Russia Longitudinal Monitoring Survey -- Higher School of Economics for 2010–16. One contribution is the quantification of impacts by allowing price elasticities to vary across consumption deciles. Overall, cigarette taxes exert a positive long-term effect on household incomes, although the magnitude depends on the structure of the conditional price elasticity. If the population is more responsive to tobacco price changes, then it would experience greater gains from the health and extended work-life benefits.
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Policy Research Working Paper WPS8626 OCT 29, 2018
Despite the well-known positive effect tobacco taxes on health outcomes, policy makers avoid relying on such taxes because of their possible regressive impact.
... See More + Using an extended cost-benefit analysis to estimate the distributional effect of cigarettes in the Russian Federation, this paper finds that the long-run impact may in face be progressive. The methodology applied incorporates the negative price effect cause by an increase in tobacco taxes, combines with a presumed future reduction in medical expenditures and a rise in working years caused by a reduction in the rate of smoking among the population. The analysis includes estimates of the distributional impacts of price rises on cigarettes under various scenarios, based on information taken from the Russia Longitudinal Monitoring Survey--Higher School of Economics for 2010-16. One contribution is the qualification of impacts by allowing price elasticities to vary across consumption deciles. Overall, cigarette taxes exert long-term effect on household incomes, although the magnitude depends on the structure of the conditional price elasticity. If the population is more responsive to tobacco price changes, then it would experience greater gains from the health and extended work-life benefits.
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Working Paper (Numbered Series) 131554 OCT 01, 2018
The results in this report for the Russian Federation support the use of tobacco taxation as an effective means to reduce tobacco consumption, raise government revenues, increase public health and promote income equality.
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This note provides an update of recent poverty and shared prosperity dynamics, and some of the underlying drivers, as well as introducing the new international poverty thresholds that are currently in use.
... See More + The purpose of the update is to take advantage of the release of Household Budget Survey (HBS) data for the 2016 survey round. The previous poverty and shared prosperity update, release in 2017, updated poverty and shared prosperity trends up to 2015. The first section discusses the overall progress poverty reduction and shared prosperity up to 2016 – the latest available household budget survey data. Notably, the poverty dynamics are presented, for the first time, using PPP values based on the 2011 ICP exercise, and using the newly adopted Income Class poverty thresholds of $3.3/day and $5.5/day. For the purposes of this note, we focus on the $5.5/day threshold, but the section also presents a comparative analysis of poverty dynamics based on old and new thresholds. Because this is the first time when internationally-comparable poverty and shared prosperity statistics for Moldova are presented based on the ICP 2011 PPP conversion factors, and relying on newly defined income-group based thresholds, the introduction has a brief discussion of the reasons behind the change in the World Bank’s poverty methodology used for global poverty monitoring, and the implications of this change for poverty trends over time and for the absolute levels of poverty reported in Moldova. Section 2 discussed the major drivers of shared prosperity during the 2011-2016 period. Section 3 examines the profile of poor and vulnerable populations, their asset endowments, and changes in this profile in recent years.
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This note provides an update of recent poverty and shared prosperity dynamics, and some of the underlying drivers, as well as introducing the new international poverty thresholds that are currently in use.
... See More + The purpose of the update is to take advantage of the release of Household Budget Survey (HBS) data for the 2016 survey round. The previous poverty and shared prosperity update, release in 2017, updated poverty and shared prosperity trends up to 2015. The first section discusses the overall progress poverty reduction and shared prosperity up to 2016 – the latest available household budget survey data. Notably, the poverty dynamics are presented, for the first time, using PPP values based on the 2011 ICP exercise, and using the newly adopted Income Class poverty thresholds of $3.3/day and $5.5/day. For the purposes of this note, we focus on the $5.5/day threshold, but the section also presents a comparative analysis of poverty dynamics based on old and new thresholds. Because this is the first time when internationally-comparable poverty and shared prosperity statistics for Moldova are presented based on the ICP 2011 PPP conversion factors, and relying on newly defined income-group based thresholds, the introduction has a brief discussion of the reasons behind the change in the World Bank’s poverty methodology used for global poverty monitoring, and the implications of this change for poverty trends over time and for the absolute levels of poverty reported in Moldova. Section 2 discussed the major drivers of shared prosperity during the 2011-2016 period. Section 3 examines the profile of poor and vulnerable populations, their asset endowments, and changes in this profile in recent years.
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Russia’s spatial disparities stem largely from its economic geography, which is unique and has no parallels even when compared to seemingly similar countries such as Australia and Canada.
... See More + While Australia and Canada also have large land masses and even lower population densities than Russia, a large share of their populations live near the border or the sea. In contrast, Russia’s people are more dispersed inland. Moreover, the populations of Australia and Canada are concentrated in major cities: more than two-thirds of their populations live in the three largest urban centers. On the other hand, Moscow, St. Petersburg, and Nizhny Novgorod are home to only one-eighth of Russia’s population. Combined with its population decline, an aging workforce, and having to constantly adapt to a sequence of economic shocks, Russia’s unique economic geography has therefore led to a spatial pattern of development counter to what is observed in other large countries. What explains Russia’s unique economic geography and its spatial disparities? A cocktail of three factors is useful for answering this question: (i) a persistent Soviet legacy; (ii) a diverse physical geography laced with harsh climactic conditions; and (iii) a dominance of natural resources (mostly oil/gas) in peripheral regions. The Soviet legacy of a planned economy remains a burden for regions. One indicator of this persistent legacy can be seen in the ongoing socio-economic challenges facing Soviet-era industrial monotowns. Today, 319 settlements in Russia are legally identified as monotowns, with 94 classified as monotowns with a high level of socio-economic deprivation. This is despite them remaining a target of many support programs implemented by the federal government. Geography and climactic conditions do not help the situation. Russia accounts for 42 percent of the world’s land mass but its population is less than 1.9 percent of the world’s population. In addition, its extreme winter weather greatly impairs transportation services (built on continuous permafrost, Yakutsk is the coldest major city in the world, recording temperatures as low as minus 64.4°C). A sequence of shocks that hit the country over the last 25 years and the boom in the oil industry created rapid growth in peripheral, oil-rich regions. But other regions have been stymied by the persistence of structural constraints: an industrial legacy, population decline, and an aging population.
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