Financial Well-Being of the Population in the Pandemic: The Impact of the Income Support Policy Response in Russia

Abstract

The paper is devoted to the quantitative assessment and analysis of changes in income and poverty in the Russian Federation during the first wave of the COVID-19 pandemic. In order to mitigate a certain decline in the financial conditions of households derived from the lockdown shock on the labor market, the federal government adopted a set of income support measures mainly addressed to families with children and officially registered unemployed. The study aims to quantify the impact of these new long-term and short-term cash transfers on average income and poverty rate for the entire population as well as across different categories of households. The two-stage microsimulation modeling is based on the data of the Statistical Survey of Income and Participation in Social Programs, annually conducted by Rosstat. The estimates show that the additional cash transfers accounted for about 15% and 35% mitigation of the decrease in average income and the increase of the poverty rate, respectively, compared to the levels at the start of 2020. It is found that families with children aged between 3 and 7 were likely to benefit most from the support measures, which almost totally prevented the growth of poverty in this category of households. Conversely, the positive impact was minimal for families with children over 7 years and negligibly small for families without children. Informal workers also fell outside the scope of federal anti-crisis social policy tools. So, for these three population categories, the aggravated problems of income reduction and rising poverty remained unresolved. The findings of the study also confirm that the universal and temporary cash transfers are much less effective in income support and curbing the growth of poverty even among recipients.