Wage inequality has decreased in Russia.

The results are published in the Journal of the New Economic Association. Russia was traditionally viewed as a country with a high level of wage inequality, but this was particularly true during the transition period of the 1990s and 2000s. Currently, Russia can confidently be categorized among countries with a moderate level of inequality. Unlike developed nations, where there is a trend of increasing disparity between the rich and the poor, inequality in Russia continues to decrease.

To assess the level of wage inequality and identify factors contributing to its decline, the author examined data from two major studies: the "Russian Monitoring of Economic Conditions and Health of the Population" (RMEC) conducted by HSE and the "Sample Survey of Household Income and Participation in Social Programs" (SSHIP) by Rosstat. The wage data was adjusted to reflect the 2005 level to accurately represent real income growth. A model was then developed to evaluate the contributions of various factors to the reduction of inequality, including increases in the minimum wage (MW), possession of higher education, region of residence, and others. Three time periods were considered: 2005–2010, 2010–2019, and 2019–2023.

The Gini index is used to evaluate inequality and stratification in society. Its value ranges from zero to one, with higher values indicating a greater concentration of income among a narrow segment of the population. From 2005 to 2023, the Gini index for wages in Russia decreased by almost 40 percent—from 0.48 to 0.30.

Analysis revealed that one of the primary factors in reducing wage inequality was education. Paradoxically, during the first examined period, from 2005 to 2010, having a higher education had less impact on income. The author notes that education has a complex effect on the level of inequality. On one hand, individuals with in-demand higher education tend to earn higher salaries. On the other hand, if the number of people with higher education exceeds the demand from employers, the financial return on education diminishes.

Throughout the entire period studied, the contribution of higher education to the reduction of the Gini index was nearly four percentage points. "Different levels of education yield different returns, and these can change unevenly. If the return on higher education increases, inequality is likely to rise. Conversely, if the return on vocational education increases, as has been observed in recent years, growing industry demands for skilled workers and insufficient supply lead to rising wages, which also reduces inequality," comments Anna Lukyanova, Associate Professor at the Faculty of Economic Sciences at HSE.

The increase in the minimum wage also made a significant contribution. Over 18 years, its contribution to the reduction of the Gini index was about one percentage point. Furthermore, the economic convergence of regions had a substantial impact on the overall decrease in inequality. In the first period, the income gap between residents of major cities and other regions was significantly more pronounced. Salary increases in the regions contributed nearly two additional points to the inequality index. Other factors, such as industry bonuses and the narrowing wage gap between men and women, also played a role.

In the final phase, from 2019 to 2023, a shift in the trend is observed. The pace of reduction in wage inequality has slowed, and the effect of education has changed. Education has begun to increase inequality again, as more workers occupy high-paying positions that require modern knowledge. The wage gap between men and women narrowed until 2019, but this progress was later lost. Currently, demographic changes and rising industrial wages play a crucial role in reducing inequality: from 2019 to 2023, the contribution of growing sectoral incomes to the reduction of the Gini index was nearly one percentage point.

"Russia has a moderate level of wage inequality by international standards, especially considering the territorial disparities. The surge in inequality accompanying the transition to a market economy has largely been overcome. Moreover, inequality in the labor market is not the whole picture, as there is also inequality related to property and capital income," notes Anna Lukyanova, Associate Professor at the Faculty of Economic Sciences at HSE. "Labor market inequality is not an absolute evil; it can have positive aspects. It can create incentives for hard work, investment in human capital, labor mobility, and career advancement. To further improve the situation, it is necessary to act carefully and precisely, focusing on key gaps."