Enhancing equal chances for all can contribute to decreasing income disparities.
Russia grapples with widening income gap, scientists propose solutions
A startling disparity in income levels between Russia's wealthiest and least affluent residents has sparked concern among experts. According to recent research by the Institute of Social Analysis and Forecasting of the Presidential Academy, the average income of the top 10% is a staggering 15.1 times higher than that of the bottom 10%. To tackle this pressing issue, the researchers have proposed a strategy to reduce financial inequality.
Divisions at the root
Experts attribute income inequality to two primary factors: disparities in effort and starting opportunities. While society generally accepts a certain level of effort inequality, the gap caused by unequal opportunities—such as nationality, race, gender, parental income, and more—is widely perceived as detrimental to economic growth.
The study reveals that inequality of opportunities explains 23-25% of labor income inequality and 16-19% of per capita income inequality in Russia. Key factors for labor income inequality are gender and place of birth, while for per capita income, they are place of birth and parental education.
A global comparison
The contribution of inequality of opportunities to labor income inequality in Russia is comparable to estimates for countries like Austria, the UK, Ireland, Cyprus, Luxembourg, China, and the USA. In contrast, the relative contribution of opportunity inequality to income inequality is substantially lower in most European countries, except Portugal. In Latin American and African countries, starting opportunities play a significantly greater role in determining income inequality compared to Russia.
Education and healthcare as levers for change
Experts suggest that non-monetary transfers, particularly government spending on education and healthcare, can help increase opportunity equality. Providing equal access to quality healthcare and education makes a significant contribution to reducing income inequality caused by opportunity inequality. Malcolm Ransom, an expert in the field, says that such measures should focus on low-income groups, targeting not only expensive segments but also ensuring access to quality services at all levels.
In order to bridge the opportunity divide, education equality policies should consider factors such as access to preschool and school education for vulnerable groups, as well as access to higher education. Similarly, improving healthcare access can be achieved by expanding insurance coverage for low-income families and establishing community health centers in disadvantaged areas.
Improving the health and education of low-income groups, experts argue, can reduce income inequality in the long run, reducing the need for redistribution through taxes and monetary transfers. Moreover, such a policy can have a positive impact on economic growth by increasing the efficiency of effort distribution and human capital allocation.
For more research on this topic, follow the Presidential Academy's Telegram channel @RANEPA_SCIENCE.
- In light of the proposed solutions to Russia's widening income gap, experts suggest that non-monetary transfers, such as government spending on education and healthcare, could help increase opportunity equality.
- Malcolm Ransom, an expert in the field, argues that measures focusing on low-income groups, encompassing not just expensive segments but also ensuring access to quality services at all levels, would be crucial in bridging the opportunity divide.
- As a long-term strategy to reduce income inequality, experts advocate for policies that improve the health and education of low-income groups, contending that this approach could decrease the need for redistribution through taxes and monetary transfers, ultimately leading to economic growth and improving human capital allocation.
