How the pandemic affected interregional inequality in Russia

Abstract

ABSTRACT Analysis of trends in interregional inequality in Russia in 2015–21 and of the actual outcome during the 2020 pandemic and the subsequent recovery in 2021 reveals short-term regional convergence in seven indicators, albeit of different depth and duration. Sub-federal budget revenue experienced the most significant and persistent reduction in interregional disparities, the main sources of which were a reduction of unevenness in a number of taxes, a significant increase in federal transfers and a change in their nature. After a strong short-term convergence, industry, trade, transport and investment all tended to return to long-term divergence paths. Personal income and wage inequality responded weakly to the shock in the short term and entered the new long-term path. Multidirectional spatial trends resulted from the interaction of sectorial and fiscal policy effects during the pandemic.