Abstract

When Russia’s housing allowance program was introduced in 1994, it was truly innovative, being the country’s first means-tested program.  But there were disadvantages from the start as well.  Especially prominent was the division of authority for setting program parameters among different levels of government and the potential for variation in the treatment of similar households in different cities.  In 1996 the program’s original simple basis for benefit determination was seriously impaired by the introduction of different principle for very low-income households.  Moreover, local governments have exhibited a willingness to increase and cut benefits from year-to-year, depending on political and budgetary considerations.  The analysis presented here documents the impact of these variations on participation rates in a sample of Russian cities.  Large inequities are obviously present in the treatment of similar households from city to city.  Indeed, it is questionable whether the program as currently configured is fulfilling the social safety net function envisioned for it in the original legislation.