BOFIT Weekly Review 2016/44
Russia's middle class hit by recession
A new Sberbank survey finds that the number of Russians that see themselves as middle class has declined sharply over the past two years. A study from the Institute of Sociology of the Russian Academy of Sciences (ISRAS) finds that the “core” middle class has suffered relatively more than lower income households.
It is difficult to evaluate trends or the size of the middle class in any country, because there is no clear agreement as to what constitutes middle class. In Russia, the middle class is a concept dealt with widely in studies of the Russian Academy of National Economy and Public Administration (RANEPA) and ISRAS. In these studies, the concept of middle class incorporates factors such as income, property, education, profession and personal experience. Some 10‒20 % of the total population has been estimated to form the core middle class in recent years. Under broader definitions, the size of the middle class expands to 20‒40 % of the population. RANEPA estimates that the percentage of households that would rank as middle class has remained largely stable throughout the past decade and a half. ISRAS found that it had grown from 30 % to 40 % over the past decade.
Due to data availability, international comparisons typically focus on income or wealth. A popular approach is to define a middle-class household by daily income: in the range of $10‒20 for middle class and $20‒50 for upper middle class (adjusted for purchasing power and household size). Using this definition, the Pew Research Center, for example, finds the Russian middle class increased from 28 % in 2001 to 37 % in 2011 and the upper middle class from 9 % to 36 %. In 2011, 18 % of the Chinese population was middle class and 4 % upper middle class; the figures for the US were 7 % and 32 %.
When wealth is compared, the middle class typically is smaller, because wealth is more unevenly distributed. A Credit Suisse survey classifies a household as middle class or higher if it has assets of at least $50,000 (PPP). Under this criterion, 4 % of the Russian population were middle class in 2015 and 0.5 % above that. In China, the share of middle class was 11 % and in the U.S. 38 %.