The Evolution of Personal Wealth in the Former Soviet Union and Central and Eastern Europe

Guriev, SG and Rachinsky, A (2008) The Evolution of Personal Wealth in the Former Soviet Union and Central and Eastern Europe. In: Personal Wealth from a Global Perspective. Oxford University Press, Oxford, pp. 134-149. ISBN 9780199548880

Abstract

This study discusses the evolution of personal wealth in transition economies. While data availability is still a problem, the available indirect evidence suggests privatization has resulted in an increase in personal wealth but also in personal wealth inequality, especially in the countries that lagged behind in building effective institutions. Another source of wealth inequality is the high income inequality that is due to wage decompression coupled with the low saving rates among the poor. This chapter pays special attention to one of the most noticeable implications of this rise in personal wealth and wealth inequality—the emergence of so-called oligarchs. Using the comprehensive dataset of Muscovites' incomes, it shows that surveys that do not take into account the first- and second-tier rich (billionaires and millionaires) may drastically underestimate inequality.