Contents -- Abbreviations -- Acknowledgments -- Executive Summary -- Part I The Nature of Poverty in the Russian Federation -- 1 Improving the Methodology for Measuring Poverty in Russia -- 2 The Profile of the Poor -- 3 The Regional Dimension of Poverty -- Part II Economic Recovery and Poverty Reduction -- 4 The Post-1998 Economic Recovery -- 5 The Effect of Economic Recovery on Labor Earnings -- 6 Poverty, Growth, and Inequality in Russia -- 7 The Impact of Accession to the World Trade Organization on Living Standards and Poverty -- Part III Reforming Sectoral Policies for Alleviating Poverty -- 8 Improving the Targeting of Social Transfers -- 9 Reforming Housing and Utility Services and Protecting the Poor -- 10 Improving the Poor's Access to Good-Quality Education -- 11 Restructuring Health Care to Decrease the Vulnerability of the Poor -- Part IV Poverty Monitoring -- 12 Using the Household Budget Survey to Monitor Poverty -- Appendixes -- A Price Indexes, Poverty Lines, and Incidence of Poverty, by Region and Territory -- B Inequality Measures -- C A Tale of Two Regions -- D Trends in Real Wages -- E The Poverty Growth Curve and Poverty Equivalent Growth Rates -- F Overview of Social Protection Programs in the Russian Federation -- G Methodology for Constructing the Benchmark Scenario and Making Welfare Inferences -- References -- Index -- Boxes -- 1.1 International practice is to measure poverty in terms of consumption -- 1.2 How should durable goods be treated when their use value cannot be estimated? -- 1.3 Delinking poverty monitoring and eligibility criteria for social assistance in the United States -- 2.1 Rich data sources are available for measuring poverty in Russia -- 2.2 How should poverty be measured? -- 2.3 Are Household Budget Survey data accurate enough to fully capture the extent of inequality?.

3.1 A significant number of Russia's villages have been abandoned -- 4.1 The government's reform strategy has helped spur growth -- 5.1 A growing gender gap in wages -- 7.1 Overview of the model and dataset -- 8.1 How much does the Russian Federation spend on social protection? -- 8.2 Targeting methods in selected countries -- 9.1 Determination of the housing allowance -- 12.1 Activities implemented during Stage I of the Enhancing Measurement, Monitoring, and Analysis of Poverty in Russia Project -- Figures -- A The incidence of poverty peaked in 1999 -- B Russia's social welfare programs are not as well targeted as programs in other countries -- 1.1 Pakistan's household survey demonstrates the unreliability of estimating household net savings from changes in financial assets -- 1.2 Income and expenditure do not appear to deviate from each other in Russia, as they do in Vietnam -- 1.3 Cash expenditures and the recommended consumption aggregate measure yield different levels and trends in inequality -- 2.1 Poverty map of the Russian Federation, 2002: Regional headcount index of poverty -- 2.2 Poverty map of the Russian Federation, 2002: Distribution of the Poor -- 2.3 The risk of poverty changes over the life cycle -- 2.4 Estimates of inequality differ from survey to survey, primarily due to methodological differences -- 2.5 Rural households have less access to modern housing amenities than urban households -- 3.1 Regional inequality in Russia is comparable to that in other large low- and middle-income countries -- 3.2 As expected, regional production and consumption in Russia exhibited a logarithmic relationship in 2002 -- 3.3 Per capita GRP rose in all but one region between 1999 and 2002 -- 3.4 Interregional differences in per capita GRP and consumption declined between 1999 and 2002.

3.5 The incidence of poverty is higher where unemployment is high -- 3.6 The incidence of poverty is lower where wages are high -- 3.7 Many of the poor live in regions with average poverty incidence, particularly in 2002 -- 3.8 The relationship between regional output per capita and poverty is negative -- 3.9 Higher regional inequality is correlated with higher poverty -- 3.10 Poverty is higher in rural areas, and poor regions have more rural residents -- 3.11 Although the majority of the poor everywhere are working families, in poor regions fewer households have multiple earners -- 4.1 Real GDP in Russia grew rapidly between 1998 and 2003 -- 4.2 All sectors declined during the recession, with construction and industrial output particularly hard hit -- 4.3 Sectors that were precrisis "losers" led the recovery -- 4.4 Growth rates in manufacturing and natural resource industries -- 4.5 Most regions contracted in 1998 -- 4.6 All but one region grew between 1999 and 2001 -- 4.7 Postcrisis recovery was stronger in Russia than in many other postcrisis countries -- 4.8 Devaluation and lower utility tariffs contributed to postcrisis recovery in the Russian Federation -- 4.9 Utilization of spare industrial capacity catalyzed the postcrisis increase in production -- 4.10 Perceptions of Russia's business climate improved between 1999 and 2002 -- 5.1 Average working time has increased since 1997 -- 5.2 Labor productivity began to increase in 1999, after declining during the transitional recession -- 5.3 GDP, wage, profit, and household income dynamics, 1996-2002 -- 5.4 After the 1998 crisis, a sharp decline in real wages allowed industrial enterprises to survive and retain more of their employees -- 5.5 Wage arrears have plummeted since 1999 -- 5.6 The gap between skilled and unskilled labor increased in 2000 and 2001.

5.7 Both the minimum wage tariff and the minimum wage have increased since 2000 -- 6.1 The crisis had a severe impact on the poor -- 6.2 Economic growth in 1999-2000 was pro-poor -- 6.3 All indexes of poverty rose until 1999 and declined thereafter -- 6.4 Inequality in consumption peaked in 1998 -- 6.5 Consumption share of the bottom quintile has increased steadily since 1998 -- 6.6 Uniform consumption would have to grow 5 percent a year to cut poverty in half by 2007 -- 6.7 Rapid growth in consumption would have a dramatic effect on the poverty gap and poverty severity indexes -- 7.1 Distribution of estimated welfare gains from Russian WTO accession -- 8.1 Utilization of occupational privileges is highly regressive -- 8.2 Rich households receive higher benefits than poor households, except in the case of the child allowance -- 8.3 Compared with other countries, targeting of programs in Russia is poor -- 9.1 Cost coverage of housing and utility services rose between 1992 and 2000 -- 9.2 Poor households spend a higher share of total expenditures on housing and utility services -- 9.3 Although the level of housing expenditures is higher for richer households, the share of housing in total expenditures is greater for poor households -- the housing subsidy significantly reduces that expenditure share for the bottom quintile -- 9.4 Housing and utility subsidies appear to be regressive -- 10.1 Net secondary enrollment rate in Russia is lower than in other transition economies -- 10.2 Enrollment in noncompulsory education is lower among the poor -- 10.3 The poor spend less on education than the nonpoor -- 10.4 Education expenditures as a percentage of GDP fell until 2000, before rising -- 10.5 As a percentage of GDP, Russia spends less on education than other countries in Eastern Europe and OECD countries.

10.6 Budget expenditure per student is positively correlated with regional per capita income -- 10.7 The share of household spending on education is positively correlated with regional per capita income -- 11.1 Life expectancy is much lower in Russia than elsewhere in Europe -- 11.2 The number of officially reported cases of HIV is rising rapidly in Russia -- 11.3 Total public expenditures on health care fell during the 1990s -- 11.4 Regional differences in per capita health expenditures are huge in Russia -- 11.5 Public spending on pharmaceuticals has fallen, while out-of-pocket payments have been rising -- 11.6 The poor spend a higher share of consumption on all types of medical services -- 11.7 Both official and unofficial payments for medical services represent a larger share of consumption for the poor than the nonpoor. -- D.1 Average nominal hourly wage, by industry, 1996-2002 -- E.1 Poverty growth curve, 1997-98 -- E.2 Poverty growth curve, 1998-99 -- E.3 Poverty growth curve, 1999-2000 -- E.4 Poverty growth curve, 2000-01 -- E.5 Poverty growth curve, 2001-02 -- E.6 Poverty growth curve, 1997-2002 -- Tables -- A Sectoral policy recommendations -- 1.1 Calorie cost rises with consumption -- 1.2 Average nonfood poverty line, by component, 2002 -- 1.3 The recommended consumption aggregate is lower than the official money income measure currently used by Goskomstat -- 1.4 The recommended poverty line is significantly lower than the official subsistence minimum level -- 1.5 The recommended methodology can yield a higher or lower headcount index than the official methodology -- 2.1 Poverty in Russia has a rural face -- 2.2 Poverty is pervasive in small urban communities as well -- 2.3 Children are at greatest risk of poverty -- 2.4 Poverty by employment status -- 2.5 Households facing cumulative vulnerabilities face the highest risk of poverty.

2.6 The majority of the poor live in working households.