Consumption Smoothing And Vulnerability In Russia
Source: University of Michigan
Applying bootstrapped quantile regression to the Russian Longitudinal Monitoring Survey (RLMS) data, the authors examine the channels through which individuals experience and seek to cope with changes in consumption. They find that married individuals living in small households, with educated heads in urban areas are better equipped to smooth consumption. Investigating the impact of idiosyncratic shocks, they find that the labour market is an important transmission mechanism allowing households to smooth their consumption but also exposing them to risk, mainly through job loss. Outside of pension payments the formal social safety net does not facilitate consumption smoothing, thus heightening the importance of informal coping institutions.