Inequality in Russia over time and over the life cycle

Using Russian longitudinal data for 1994 - 2018, we document a secular decline in consumption and income inequality. Although within-cohort inequality is also declining, the lifecycle inequality profiles of income and consumption are surprisingly flat. A calibrated lifecycle model with incomplete markets, high initial variance of the persistent income component, and moderately persistent income shocks is consistent with nearly flat lifecycle inequality profiles and the puzzlingly large insurance role of assets found in the Russian data. This is in contrast to the standard calibrations that fail to match the lifecycle inequality profiles and the panel-data evidence on consumption insurance.