2150. Who Wants to Redistribute? Russia's Tunnel Effect in the 1990s

Martin Ravallion and Michael Lokshin
(July 1999)

It seems natural to expect the rich to oppose policies to redistribute income from the rich to the poor, and the poor to favor such policies. But this may be too simple a model, say Ravallion and Lokshin. Expectations of future welfare may come into play. Well-off people on a downward trajectory may well favor such policies and poor people on a rising trajectory may not.

This resistance of upwardly mobile poor people to lasting redistribution is analogous to Hirshman's "tunnel effect," as applied to traffic stuck on a congested two-lane road in a tunnel: People's spirits lift when traffic starts moving again; but when another lane starts moving and theirs doesn't, they might grow furious and want to correct things by crossing the double line separating the two lanes.

Using Russia in the 1990s as the setting, Ravallion and Lokshin analyze why some people favor governmental redistribution and others do not and whether there is a "tunnel effect." They find that:

• Some 72 percent of the 7,000 adults surveyed in October 1996 favor government action to reduce incomes of the rich. But the other 28 percent were not only the currently "rich."
• About 85 percent of those in the poorest consumption decile favor redistribution. But among those who expect their welfare to decline, support for redistribution is high, even among the currently "rich." There is little support for redistribution among the well-off who expect to become even better off. Resistance is greatest among those on a rising consumption path who expect it to continue.
• Women tend to favor redistribution more than men.
• Those who favor redistribution include people who voted communist and people who are vulnerable: the old, women, poorly educated adults, people who live in rural areas, people who expect to lose their jobs, and people who do not think the government cares about them.

This paper - a product Poverty and Human Resources, Development Research Group - is part of a larger effort in the group to understand the political economy of redistributive policies. Copies of the paper are available free from the World Bank, 1818 H Street NW, Washington, DC 20433. Please contact Patricia Sader, telephone 202-473-3902, fax 202-522-1153, Internet address psader@worldbank.org. Martin Ravallion may be contacted at mravallion@worldbank.org. (26 pages)

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