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Poverty in Russia: public policy and private responses by Jeni Klugman, World Bank

By Jeni Klugman, World Bank

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This section addresses these issues. What Is Poverty? To determine who is poor, one must decide how to define poverty. Broadly speaking, two alternative approaches are available, relative and absolute. Page 10 A relative approach considers people whose income (or expenditure) falls below a certain share of the average income (or expenditure) as poor. This approach is used in most industrial countries. An absolute approach depends on the identification of a minimum threshold below which people are regarded as poor.

This book also serves a direct functional purpose: good policy can only derive from detailed knowledge of which people are poor and why. While this book does not provide a detailed package of reform proposals in response to the social aspects of the transition, it does attempt to describe and explain some of the more pertinent issues that will need to be addressed by policymakers in the Russian government, as well as by policy advisers from international institutions and elsewhere. Its focus, and the somewhat peripheral treatment of macroeconomic and restructuring issues that are treated more fully elsewhere (see, for example, World Bank 1996a), make the analysis undertaken here a necessary, but by itself insufficient, input into policy design.

Donald Cox is a professor of economics at Boston College. He has undertaken research on intergenerational transfer behavior in developing and transitional economies and in the United States. He has also done research on such topics as human capital accumulation and savings behavior. He has worked as a consultant on numerous projects for the World Bank since 1986. Zekeriya Eser is a PhD candidate in economics at Boston College. He received his BA in economics from Bogazici University in 1987. He has done research on intergenerational transfers in developing economies and has written on robust estimation and instrumental variables estimation.

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