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Working paper

Income Stratification: Key Approaches and Their Application to Russia

Public and Social Policy. WP BRP / PSP. НИУ ВШЭ, 2016. No. WP BRP 02/PSP/2016 .
The various approaches to income stratification can be divided into two broad categories – relative and absolute. Our study suggests that the most widely used thresholds of the absolute approach cannot be efficiently applied to contemporary Russian society, which has undergone fundamental changes over the last 15 years regarding income, as they fail to define the subgroups within the population. Absolute models of stratification which define income groups based on a pre-determined income thresholds rank Russia in line with industrially advanced rather than developing countries, rendering the absolute income bounds, set for the latter group of countries, irrelevant. The relative approach, based on the median income as the social standard of living, appears more effective for income stratification in Russia. Furthermore, it also implies possibilities for structural adjustments such as regional- and settlement-specific disparities in income distribution, which are relevant for Russia given its regional heterogeneity. The application of the relative approach in authors’ version shows that the income stratification model in Russia is quite stable even during the economic crisis. The results of the comparison between the Russian income stratification model and those of other countries confirm that Russia's income stratification model is currently more similar to those of developed rather than developing countries.