9 - Changes in income inequality in the USSR

Summary

Introduction

This chapter is a part of a long-term project investigating the interrelationship between economic reforms in the Soviet Union and changes in income inequality. It aims specifically to examine how the increasing role played by the market mechanism affects the pattern of income distribution in that country. This chapter, seen as a point of departure for this long-term project, sets out to analyze what the Soviet record is in the field of wage and income distribution during the last two to three decades. Such ‘stock taking’ is not only valuable in itself but is also a necessary first step towards the further investigation of the complex correlation between the marketization of the Soviet economy and changes in the inequality of income.

Statistical data about income distribution in the USSR were for many years a strongly guarded secret. Only occasionally have Soviet economists been allowed to reveal the ‘secret’ and published in the form of a ready statement the relative dispersion of wages and incomes, usually decile ratios, without giving the frequency distribution from where it was computed. According to N.E. Rabkina and N.M. Rimashevskaia, the decile ratios in the socialized sector were as follows:

1. 1964 – 3.69

2. 1966 – 3.26

3. 1968 – 2.83

4. 1972 – 3.10

5. 1976 – 3.35

6. 1981 – 3.00

Western economists, however, have been able, on the basis of the theoretical assumption that Soviet distribution of wages and family incomes are log-normal, to calculate the decile ratios and offer percentiles ratios without frequency distribution data.