The distributional effect of a financial crisis: Russia 1899–1905
Who pays for financial crises? This paper examines the period between the major Russian financial crisis of 1899–1902 and the Russian Revolution of 1905. Using newly constructed aggregate-level data and narrative evidence, this paper finds that in response to the crisis, the Russian government and industry transferred income and wealth from ordinary workers to industrialists and investors. The recipients of transfers weathered the crisis well and profited during the recovery, while employees’ wages and wealth fell behind.
The article focuses on the impact of financial crisis in Indonesia on the budget for public infrastructure, services, and transfers. The behavior response of the population to the crisis could mean future welfare costs of an economy. With this regard, multiple equilibria in the income or wealth dynamics at the household level has been suggested in such away that hysteresis can stem from a transient income. A counterfactual assessment of the local welfare impacts of the crisis, both in short and long-term is provided.
In theory, a poverty line can be defined as the cost of a common (inter-personally comparable) utility level across a population. But how can one know if this holds in practice? For groups sharing common consumption needs but facing different prices, the theory of revealed preference can be used to derive testable implications of utility consistency knowing only the "poverty bundles" and their prices. Heterogeneity in needs calls for extra information. We argue that subjective welfare data offer a credible means of testing utility consistency across different needs groups. A case study of Russia's official poverty lines shows how revealed preference tests can be used in conjunction with qualitative information on needs heterogeneity. The results lead us to question the utility consistency of Russia's official poverty lines.
Special characteristics of modern employment demonstrate serious changes in the character and the content of the labour process. The phenomenon of “the end of labour in its classical sense”, which triggered heated debates in the end of the XX century, was described in details by British sociologist Z. Bauman in his work «The Individualized Society»:
“That situation has changed now, and the crucial ingredient of the change is the new ‘short term’ mentality which came to replace the ‘long term’ one. Marriages ‘till death us do part’ are now a rarity: the partners no longer expect to stay long in each other’s company. According to the latest calculation, a young American with a moderate level of education expects to change jobs at least eleven times during his or her working life – and that ‘job-changing’ expectation is certain to go on growing before the working life of the present generation is over. ‘Flexibility’ is the slogan of the day, and when applied to the labour market it means an end to the job ‘as we know it’, work on short-term contracts, rolling contracts or no contracts, positions with no inbuilt security but with the ‘until further notice’ clause” [Bauman 2001, p. 24].
Rising on the wave of industrialization, after the transition to the postindustrial, information epoch, labour is losing its past significance. More and more people consider labour as a heavy routine and would like to get rid of it forever. And especially in the circumstances of depressive aggravation of the so called global problems, which have not only been left unsolved since they were identified by the Rome club, but continue to forebode humanity death from ecological catastrophes, depletion of natural resources, incurable diseases, the planet’s overpopulation etc.
There are obvious dramatic changes in the labour and employment sphere. After the transition to the postindustrial economy, classic labour (as a hard, back-breaking work, focused on achieving a material (embodied) result) ceases determining the sense of human existence.
In the later decade Russia continued progress in terms of economic growth and lowering poverty. Yet Russia was much less successful in reducing inequality which skyrocketed after the market liberalization reforms in the early 1990s. Currently inequality in Russia has stabilized at the level which is significantly above the OECD average: the average Gini coefficient for the OECD countries in 2014 was 0.318, while it was 0.416 in Russia. Current macroeconomic environment with continuous recession, which started in 2014 and massive terms of trade shock due to collapse of oil prices, threatens to reverse Russia’s substantial achievements in terms of raising incomes of the population and reducing poverty. This chapter aims to provide a comprehensive analysis of income and wealth inequality in Russia and the impact of the current crisis. The focus throughout the chapter is on the national distribution of income and wealth. In market economies income and wealth serve as good predictors of well-being in other domains, such as social inclusion, education, health, etc.
Russia’s transition towards a market economy in the early 1990s called for new approaches to the regulation of employment relations in the post-Soviet era in order to strike a balance between employers’ interests and employees’ rights in modern conditions. Adopted in 2001, the Labour Code of the Russian Federation (hereafter: LC RF) contributed to solving the issue only partly, for it was actually passed as a compromise between different political forces. As a result, it consists both of provisions which can be implemented in the new context of the market economy and restrictions inherited from a planned economy.
It soon became apparent that Russian employment legislation was in need of further development to adapt to ever-changing socio-economic conditions and the increasing complexity of the employer-employee relationship resulting from globalization and technological progress.
This state of affairs resulted in extensive amendments to the LC RF, in particular in 2006, when the majority of the provisions were profoundly revised. However, previous experience shows that many aspects concerning the legal regulation of employment relations are far from being addressed, not least compliance with international standards and practical needs at a national level.
In this special issue of the ADAPT Labour Studies BOOK-SERIES the authors try to achieve a twofold objective: rate recent developments of Russian labour law from a practical and a theoretical point of view and reveal its new challenges.