Study of the relationship between the development level and degree of income inequality in the Russian regions

Abstract

The subject of this article is the types of relationship between economic development and degree of income inequality in the regions of the Russian Federation. Research methods: testing the modified Kuznets hypothesis; relative deflating of regional parameters; calculating the differentiation and localization coefficients; constructing the Lorentz curves; correlation and regression analysis. Obtained results: 1) for Russian regions author discovered significant direct statistical relationship between the Gini and funds coefficients and the level of real per capita income with increasing returns, as well as less strong direct relationship between coefficients of differentiation mentioned above and the real GDP per capita with diminishing returns; 2) the “social wellbeing†coefficient is proposed and calculated for the regions, which based on localization index of real per capita income relative to the differentiation coefficient, and 3) the degree of interregional disparities in the Russian Federation is evaluated on the basis of the Gini coefficient, coefficient of variation and relative entropy for the nominal and real income and GRP per capita, and Lorenz curves for them are constructed. In this paper, author concluded: 1) presently the level of economic development of the Russian Federation regions negatively affects their income equality due to most of them are on the ascending branch of the S. Kuznets curve, 2) “social welfare†coefficient changes the positions of the middle-income regions more, than that of other regions, and 3) two factors have a positive impact on reducing the regional disparities: more ratio of total personal income to GRP in poor regions relative to rich ones (i.e. greater “social orientation†of poor regions), and positive correlation between income and the cost of living in the regions. The obtained results can be used by researchers in further testing the modified Kuznets hypothesis, as well as by local authorities in the income policy optimization at the regional level.