In Komi Republic, the size of povertybenefit was determined as the difference between the amount of GPI and thefamily per capita income calculated by methodology developed by experts of theCompany for Social Technologies and Expertise (SOTEKO). The size of familybenefit was calculated as the product of the benefit per one member of thefamily by the number of family members. Information on the families granted thestatus of poor but not eligible for the benefit was kept in the electronicdatabase. These families were a reserve to join the beneficiaries as the levelof GPI increased, or in case their per capita incomes fell below the level ofGPI. Minimal size of poverty benefit is limited in Komi Republic by an amountwhich can be a basis for opening an account at Sberbank subsidiaries, i.e., 10Rubles. Maximum family poverty benefit calculated during the pilot project was1532 Rubles.
Under the proxy-means test used tocalculate poverty benefits in three districts of Volgograd Oblast, eligibilitywas granted to all the families having a status of the poor and per capitaincome, calculated by proxy-means test, below the regional subsistence level.The amounts of poverty benefits were calculated using a special scale (Table 4)and depended on the relation of potential consumer per capita expensescalculated with a proxy-means test, and the subsistence minimum.
Poverty benefits calculated under theproxy-means test in Volgograd Oblast
Potential ConsumerExpenses of the Family (as per cent of subsistence minimum)
Size of Benefit perFamily Member
(Rubles per month)
The amounts of benefits calculated forcertain categories of the population in the other districts of Volgograd Oblastwhere the Unified Procedure applied could not exceed the 50 per cent differencebetween the beneficiary subsistence budget established for this period and thefamily per capita income of the beneficiary. The maximum monthly payment forthe family with one beneficiary was 25 Rubles, with two to threebeneficiaries - 45 Rubles, with four to six beneficiaries – 55 Rubles, and with over sixbeneficiaries - 60 Rubles.
In Voronezh Oblast the total amount of thebenefit paid to a family was the sum of differences between the actual averageper capita income of the family and the subsistence minimum of each member ofthe family eligible for social benefits. Due to the lack of sufficientbudgetary resources required to provide support under the pilot, regionaladministration established that the amount of cash benefit for one beneficiaryin the family was equal to 15 per cent of regional subsistence level, for twobeneficiaries – 25per cent, for three to four – 35 per cent, for five and more beneficiaries in the family– 50 per cent of theregional subsistence minimum. Regardless of the size of the difference betweenper capita income and subsistence level, the family was eligible for a benefitof at least 10 per cent of the subsistence minimum. As a result, the minimumsocial benefit in Voronezh Oblast under the pilot project amounted to 33.2Rubles, and the maximum benefit – to 166.5 Rubles.
Different methods to calculate familyincome for eligibility determination purposes were tested under the pilotprojects.
In Komi Republic, the method of regionalregulation of minimum per capita income (RRMPI) was used as proposed by SOTEKOand pilot project tested; in Voronezh Oblast the method used was the combinedcategorical and income-test methodology applied by TsUZh on the basis ofavailable methodological findings. In three districts of Volgograd Oblast theproxy means test tested by ISEPN was used. And, finally, in the otherdistricts of Volgograd Oblast the methodology used was one based on the UnifiedProcedure for providing targeted social assistance.
Despite the fact that some of thesemethodologies (in the first place, the one used in Komi Republic) aremulti-functional, the main purpose of using them in this case was to calculateincome of families claiming eligibility.
In Komi Republic the “full per capitaincome” was assessed taking into account, besides monetary and in-kindforms of family income traditionally used in such methodologies, also theeconomic potential of the family (EPF) – additional sustainable incomewhich the family does not receive, but could have received if it reasonablyused the labor capacity of the family members, real estate and transportfacilities in existing social and economic environment.
So, EPF, in addition to income from privateplot, includes also other household assets which can be used to generateincome. The range of assessed potential sources of additional familyincome includes:
labor capacity of the family;
potential income of the family from private plot;
potential income from excessive housing facilities;
potential income from sale of excessive housing facilities bypensioners to the state with deferred enforcement;
potential income from vehicles and some other sources of income.
In the main part of Volgograd Oblastcovered by the Unified Procedure, the formal per capita monetary income wastaken into account for eligibility assessment.
The methodology used in three pilot regionsof Volgograd Oblast was essentially different from all the preceding ones,since it allowed additional assessment of family income by analyzing the levelof actual consumption. Calculation of recurrent available material resources ofthe family was made with the specified rate of potential consumer expenses ofhouseholds. The value of this particular indicator was used to identifythe poorest households.
Implementation of procedures for additionalassessment of income of the population of Volgograd Oblast (based on samplebudgetary survey of households) and factor redistribution of an average valueof this additional assessment by different household types resulted in amultiple regression model using easily recorded and verified householdparameters as factors, including :
formally recorded per capita income;
gender and age characteristics of the family members;
urban or country residence;
the fact of getting child allowances, etc.
In Voronezh Oblast the income of certaincategories of the population considered to be eligible included all recurrentand lump-sum monetary incomes of the family taxable under RF Law “On Income Taxon Physical Persons ” (wages/salaries, entrepreneur income,), as well as incomenot subject to taxation (maternity benefits, child care allowance (in case ofchildren under a year and half); all kinds of pensions plus increases,supplements and compensations to them; severance payments and associatedmonetary compensations; unemployment benefits and stipends paid duringvocational training and retraining from the State Employment Fund; grants paidto students and pupils of higher professional education, secondary educationand primary vocational training institutions other educational establishments,research grants to post graduate students, alimony, etc.
On the other hand, the aggregate income didnot include lump-sum state benefits paid at child’s birth; death grants; alimonypaid by family members.
Consequently, methodology for assessing percapita income adopted in Voronezh Oblast was an official one adopted byGoskomstat of Russia.
As a result of testing, all above mentionedmethodologies in one way or another are being used in different regions of theRussian Federation while setting up new programs of targeted socialassistance.
3.Analysis of household income and consumption differentiation
Registration of the inter- andintra-regional income inequality and the difference in the level of consumptionof households required for proper specification of procedures for povertyassessment remains one of the main prerequisites for targeted social assistanceprograms. Among key questions are the following: inter-regional incomeinequality, intra-regional income inequality, relation between household incomeinequality and the volumes of benefits and privileges received byhouseholds.
Each type of social safety net benefit istargeted for different sort of recipients. At the same time, social guaranteesperform the following functions: compensatory (consumption support at thestandard level), protective (maintaining labor and household conditions),stimulating (promoting recipient’s labor and business activity, resources saving).
The system of social protection (providingfree or subsidized consumption for a limited group of population, to be moreprecise—subgroups)and the system of free and subsidized services (providing social complexservices at the minimum standards for certain layers of population withoutlimitations), catering for unprovided groups of population. Although the rightfor consumption belongs to all households and their members, in reality poorhouseholds more frequently request benefits than the well-provided ones due tothe fact that the latter get them for money. Nevertheless, the main factor,which defines the volume of final consumption of free and subsidized services,is the household structure in terms of gender, age, and status of employment.Single parent families with many children, pensioners objectively tend toreceive free services and privileges because precisely these categories ofpopulation are potentially more eligible for privileges and have inadequateresources for getting these services for money.
In spite of the fact that money incomerepresents the main source for consumption, evaluation of real finalconsumption and the extent of its correspondence to the needs must includeconsumption of free and subsidized services, transfers in kind for the memberof a given household.
In social and economic life of society,financial position of each member of society is defined not only by his/herindividual income, but also by an income of his/her household. Total income ofthe members of a household constitutes a single source that covers needs of allits members, including those who lack individual income.
The size of a household has a two-wayinfluence on the level of income and consumption: increase in the number ofhousehold members can result in a growing number of income recipients or in agrowing number of consumers. In the first case, per capita income grows, in thesecond case it falls. At that, one should bear in mind a more rationalhousekeeping in cases of large families due to a more effective use ofresources. It relates to a satisfaction of collective needs of householdmembers at the expense of goods and services whose cost remains constantindependently of a number of consumers (lodging, durable goods,etc.).
The difference in household size andstructure requires a need to carry out special computations designed toevaluation the well being of a household with the help of the so called“equivalence scales”. The latter allows measuring correctly the difference inpurchasing power of households with similar incomes due to saving fromhousekeeping in a large family.
Application of an equivalence index equalto 0,73 as recommended by OECD is not at all adequate in case of the RussianFederation because it does not reflect specificity of the household expenditurestructure. Taking into account consumption norms for able-bodied citizens,children and pensioners and the structure of subsistence minimum, which takesinto consideration expenditure on goods and services for all-familyconsumption, computations testify that it is more adequate to apply equivalenceindex equal to of 0,85. A higher index is explained by the fact that in thehousehold expenditure structure in Russia, the share of spending on goods andservices for individual consumption is higher than in the OECD membercountries.
The rate of money income of each householdis determined by a number of active members, i.e. that have an independentsource of income. The income rate in terms of social assistance (including inkind) is mainly determined by a number of household members their age and someother characteristics.
Total household income should reflectpublic social programs targeted at supporting low-income groups by way ofproviding free or partly free and subsidized social services, taxprivileges.
Domination of this or that source of incomein household budget determines its social status or place in the socialhierarchy (a family of businessmen, farmers, wage earners, pensioners, etc.).Findings demonstrate that the income level is linked with the family sizethrough the structure of population depending on the number of children, thenumber of adult dependents per family, pensioners living with the family andliving alone.
The level of material well being of thehouseholds depends to a considerable extent on the ratio between the number ofworking and non-working household members, i.e. on the indices of employmentand “demographic burden” which includes the number of dependents per oneworking person. The low-income households demonstrate the lowest level ofemployment and the highest level of demographic burden.
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