How to combat poverty and ensure sustainable growth of the middle class: criteria of distribution and policy measures (part 2)

Abstract

The traditionally applied approach to determine the boundaries of poverty and the middle class based predominantly on the criteria of income level overlooks a wide group of citizens related to low-income category. The paper examines multicriteria approaches in determining the boundaries of poverty and the middle class which cover social, economic and behavioral factors. As an essential criterion to classify population as a poor class the authors chose behavioral characteristics related to the possibility and propensity for long-term planning. Applied regression analysis confirms the significance of some households’ social and economic characteristics that increase the likelihood of their belonging to a certain population group, such as household size, age of the head of household, education level, professional activity, etc. Based on various methodological approaches, the analysis of the Russian society structure reveals its high polarization where the share of the poor fluctuates from 10% to a quarter of population and even more considering the parameters that determine the quality of life, behavior and self-identification. Drawing on multicriterial approach, the authors propose additional measures of support, which cover not only the poorest segments and large families, but also a significant cohort of low-income citizens, as well as measures that contribute to higher-income work and the increment of human wealth. The analysis concludes with cost assessment of suggested measures and the effect of their implementation on socio-economic development and welfare until 2030.