Research purpose: We focus on the impact of allowing economies of household size on the poverty calculations in Russia. The issue of sensitivity of poverty calculations is examined with respect to the poverty rate and poverty profile. We also explain the impact of external negative shocks of different nature on migration decision. We also analyze the possible effect of the changes in the taxation of cross-border e-commerce on the poverty rates and income distribution in Russia.
Empirical base of the research: The Russian Longitudinal Monitoring Survey and the Kyrgyz Integrated Household Survey
Research results: We demonstrate that, regardless of the method, larger households can reach a given level of wellbeing with less per capita costs compared to smaller households. The aggregate poverty estimates and composition of the poor derived with adjustments on household size will differ significantly from the Russian official statics. We also formulate a model of household decision that predicts the impact of shocks on migration decision through household members productivity. In empirical part we find robust positive effect for several shocks: mudflows and landslides, crop and livestock disease and land disputes. Our results also suggest that lowering the limit of the value of goods for customs-free import would affect mostly rich households. The effect on the poor would be minimal. The redistribution of the collected tax revenues among poor households could be an effective measure for poverty reduction.
Implementation of the research results: The knowledge about scale economies in household consumption is crucial for poverty measurement and policy implementation. Such adjustments might change the focus of government policies and lead to re-evaluation of the effectiveness of government programs. Taking into account the economies of scale in household consumption might affect both size and a profile of the groups targeted by anti-poverty programs. Our research is also relevant for Russian and Kyrgyz migration authorities to predict migration flows. It might also help governments and international organizations to distribute aid in case of natural disasters and other shocks.