Participation in a decentralised housing allowance programme in a transition economy

Abstract

When Russia's housing allowance programme, the country's first means‐tested programme, was introduced in 1994, it was truly innovative. However, there were difficulties from the start, many arising from the division of authority for setting programme parameters among different levels of government and the potential for variation in the treatment of similar households in different cities. In 1996, the programme's original simple basis for benefit determination was seriously impaired by the introduction of different principles for very low‐income households. Moreover, local governments have exhibited a willingness to vary benefits from year‐to‐year, depending on political and budgetary considerations. The analysis presented here documents the impact of these variations on participation rates in a sample of Russian cities. Large inequities are obviously present in the treatment of similar households from city to city. Indeed, it is questionable whether the programme as currently configured is fulfilling the social safety net function envisioned for it in the original legislation.