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TERRA ECONOMICUS

Hidden income of households: an empirical evidence

TERRA ECONOMICUS, , Vol. 14 (no. 4),

The paper presents the results of micro-data analysis, showing distribution and level of household hidden income. Modern trends in foreign and Russian studies on hidden income of population are described. Econometric evaluation of the extent of hidden income relies on the panel data of “The Russia Longitudinal Monitoring Survey – Higher School of Economics (RLMS-HSE)” (covering the period from 2006 to 2014). The analysis uses the logistic regression model, with the binary variable as the dependent variable, which equals 1 when current household expenses and savings exceed the household disposable resources for two adjacent periods. This method enables the author to identify households that use to consistently underestimate their income. As the findings have shown, a large number of households underestimate their income regularly. Thereby distortions in the interpretation of welfare indicators such as inequality and poverty take place. The relationship is identified between the presence of household hidden income and other socio-economic characteristics of households, their income level and settlement behavior. It is argued that the assessment of the household consumption is a more reliable indicator of well-being compared to the current cash income.


Keywords: households; hidden income; disposable resources; consumption expenditure; poverty

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Publisher: Southern Federal University
Founder: Southern Federal University
ISSN: 2073-6606