Abstract
This study develops the approach of corruption measurement based on the incomeexpenditure comparison. Using micro-level data on reported household earnings, expenditures and assets provided by Russian Longitudinal Monitoring Survey for the period 2000-2009 we nd that households with workers in the public sector receive lower earnings than their private sector counterparts, but enjoy the same level of consumption expenditures, in other words there exists an expenditure-income gap in favor of the public sector. Controlling for the reported level of earnings, households with workers in the private sector do not show neither a signicantly higher probability of possessing country houses, cars and computers, nor living in better housing conditions, nor having higher nancial wealth. The analysis of current and accumulated savings, risk aversion and volatility of wages does not show any sign of distinction between two sectors. Thus, dierences in assets and precautionary motives of workers cannot reconcile the sizeable expenditureincome gap. Unexplained dierences are referred to unreported income, or bribes.
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