The distributional impacts of the COVID-19 crisis and policy response in Russia

Abstract

The outbreak of COVID-19 has had severe negative economic impacts on households and businesses in Russia. Russia’s GDP declined by 2,7% in 2020. To mitigate the adverse impacts of the pandemic, in March—June 2020 the govern- ment implemented a number of fiscal and social policy measures aimed at support- ing businesses, employment and incomes of vulnerable groups of the population. This paper presents the results of the impact assessment of the COVID-19 crisis and the related policy interventions on the income distribution and poverty in Russia in 2020. The analysis is based on the tax-benefit microsimulation model for Russia, which allows for assessing the redistributive effects of direct and indirect taxes and transfers in Russia at the federal and regional levels. We find that the net effect of the crisis and policy interventions was strongly progressive at the bottom of the income distribution and equalizing across regions.