Do Adjustments for Equivalence Scales Affect Poverty Dynamics? Evidence from the Russian Federation during 1994–2017

Abstract

Hardly any literature exists on the relationship between equivalence scales (ESs) and poverty dynamics for transitional countries. We analyze ESs constructed from subjective wealth and more than 20 waves of household panel survey data from the Russia Longitudinal Monitoring Survey between 1994 and 2017. We find that the ES elasticity is sensitive to household demographic composition and ES adjustments result in lower estimates of poverty lines. We decompose poverty into chronic and transient components and find that chronic poverty is positively related to the adult scale parameter. However, chronic poverty is less sensitive to the child scale factor compared with the adult scale factor. Interestingly, the direction of income mobility might change depending on the specific scale parameters that are employed. The results are robust to different measures of chronic poverty, income expectations, reference groups, functional forms, and various other specifications.