Regression-Based Decomposition of Income Inequality Factors in Russia

The purpose of this study was to identify the factors of income inequality in Russia using RLMSdata (2009–2016). In this paper inequality refers to differentiation in equivalent household income, adjusted for the cost of the consumer basket in the regions of Russia. To solve the problem, we used regression decomposition of the inequality index. According to the results, such factors as “the share of children in households”, “the size of households” and “the share of non-working adults” had the largest positive contribution to the inequality index. The “region of residence” factor, which is usually considered as the key factor of inequality in Russia, had an equalizing effect. This is due to the fact that we analyzed differentiation in the standard of living. Indeed, we calculated the dependent variable of income, adjusted for the cost of the consumer basket in the relevant region. Thus, the level of inequality was not affected by the regional attribute, but rather by the differentiation of other significant factors of the regions. The obtained results can be used for a deeper study of the causes of changes in inequality.