The Soviet Household Under the Old Regime: Economic Conditions and Behaviour in the 1970s.

• Author: Nowakowski, Joseph M.

Ofer and Vinokur present a detailed study of Soviet household behavior in the penultimate decade of the Soviet regime. The methodology reflects the assumption that behavior is conditioned by the same influences that affect behavior in Western societies, with allowances made for institutional differences in the Soviet economy.

The book can be divided roughly into three sections: the first three chapters establish behavior patterns in a "typical" Soviet household based on a cross-section of data. Income patterns are examined, with particular attention paid to the importance of (legal and illegal under Soviet law) private earnings. Although private activity was found to be an important factor in urban areas, the overall impact on Soviet GNP was rather small (3-4%). The authors draw two (perhaps controversial) conclusions from these results: there was no substantial evidence of repressed inflation indicated by the existence of private activity, and private activity probably had a small effect on household welfare levels. Next, household saving was examined using variants of life-cycle theories of saving. Results were similar to those of Western studies: saving and the average propensity to save were positively correlated with income, and negatively correlated with family size. The authors concede that observed saving may be overstated because of the absence of negative savers, due to the absence of functioning credit institutions and to the exclusion of certain groups likely to be dis-savers (pensioners, student families, one parent families) from the data.

The middle chapters concern income distribution. Income and wealth inequalities are analyzed in Chapter 4, with the conclusion that income per household member and wages per worker were more evenly distributed in the Soviet Union than in Western countries. Private earnings reduced the level of wage equality. The increased equality may have been offset, however, by the lower general level of development, and the price paid in consumer choices and personal liberties. Chapter 5 examines the impact on household incomes of public sector transfers (either monetary transfers or direct services) comprising the Social Consumption Fund (SCF). The aims of the SCF were contradictory: there was an efficiency component (designed to allocate labor among different occupations optimally and to maximize labor force participation) at odds with the equity component (designed to prevent poverty and to increase...