Economic Constraints and Social Opportunities:
Participation in Informal Support Networks
of
Russian Urban Households
Valery Yakubovich
Stanford University and ISITO, Moscow
e-mail:
January, 1999
This paper has been prepared within the framework of a project on 'Household Survival Strategies, Job Creation and New Forms of Employment in Russia', directed by Simon Clarke, Centre for Comparative Labour Studies, University of Warwick, conducted by the Centre for Comparative Labour Relations Research (ISITO), Moscow and funded by the UK Department for International Development. The project was a component part of a wider research programme funded by the British Economic and Social Research Council on 'The restructuring of employment and the formation of a labour market in Russia'.
The UK Department for International Development (DFID) supports policies, programmes and projects to promote international development. DFID provided funds for this study as part of that objective but the views and opinions expressed are those of the author(s) alone
How do Russians survive during the ongoing experiment with a transition to market economy when the economy itself is drastically shrinking and even those who have regular jobs are not paid for months or even years? Although this question was intriguing and puzzling at the onset of the Russian socioeconomic reforms, there seems to be no mystery anymore. The generally accepted answer to this question suggests that Russians work in the informal economy, dig their private plots, and rely on help from family and friends. This paper evaluates the accuracy of this conventional wisdom with regard to the role of social support networks in the Russian household economy. It attempts to shed light on four questions. How widespread is the use of family ties and friends? How important is the contribution of social networks to household budgets? Does the participation in such networks depend on the family’s overall economic well-being or is it predetermined by the social opportunities structure, i.e., are those who are involved in particular kinds of ongoing social relationships also engaged in various kinds of economic exchanges, regardless of their personal economic standing?
2. The Role of Support Networks in Economic Well-being of Russian Households
Quantitative data on the economic role of social networks in Russia during the transition is very limited. The only systematic analysis by Cox, Eser, and Jimenez (1998) is based on the Russian Longitudinal Monitoring Survey (RLMS) which includes a number of questions on the sources and amount of private transfers. The authors pursue an issue which has both theoretical and policy implications, namely, the relationship between the macro-policies of the state in redistributing public funds and the micro-behavior of households in their exchanges of various resources with each other. Can private transfers substitute for state support? As the authors themselves recognize, the results of their analysis are rather mixed. Although they obtain some evidence that private transfers have a redistributive effect and help alleviate poverty, their models explain only a small fraction of the variation in the amounts of transfers. More importantly, a number of aspects of this study make it the starting rather than endpoint for the inquiry into the ways of coping with economic hardship in modern Russia.
First, it does not explore the relationship between wage arrears and participation in informal support networks. While this remarkable phenomenon of the Russian economic transition was in its embryonic state in 1992, it is currently the primary concern of the overwhelming majority of Russian workers (Clarke 1998, Earle and Sibirianova 1998). Therefore, it is crucial to explore the consequences of wage arrears for a household’s participation in informal economic exchanges. In this paper, I distinguish between two effects of wage arrears on participation in support networks. On the one hand, wage arrears decrease the absolute household income and thereby force the household to resort to help from family and friends. At the same time, they affect the relative standing of the household with regard to its own well-being under the condition that its monetary income is paid in full and on time. Does this also lead to some form of participation in support networks? The first effect, if found, determines the very survival of the household, the second one influences its well-being in a broad sense. Comparing and contrasting these two effects, we can better understand if social support networks are just a means for alleviating impoverishment or a more far-reaching tool for supporting socioeconomic standing.
Another unresolved issue which is particularly intriguing for sociologists is the structure of social relationships which makes the sustained economic support possible. Cox et al. (1998) assume the existence of the social structure conducive to informal economic exchanges, which is believed to be a product of the socialist economic order with its permanent shortages and thus widespread dependence on private trading networks. This is consistent with the popular view of Russians as heavily reliant on family and friends to solve economic problems. The informal institutionalization of this attitude is indicated by proverbs such as “Ti mnye - ya tebye” (“You give me, I give you”) or “Ne imey sto rubley, no imey sto druzey” (“Don’t have one hundred rubles, but have one hundred friends”). In fact, an attempt to formalize such practices within families was made in the late Soviet Constitution which treated taking care of young children and elderly parents as primary responsibilities of parents and children respectively (Konstitutsiya SSSR 1983). Scarcity of basic goods, housing, and services under state socialism reinforced interdependencies within families and friendship networks and, consequently, a crucial importance and availability of such ties in each particular case is assumed by default.
The social reality of the Russian economic transition casts doubt on the accuracy of this assumption. If in a stable social system members of the same family tend to occupy relatively similar positions in the social structure, drastic economic reforms can create significant inequalities in opportunities among them insofar as only some localities, i.e., specific industries and occupations, initially benefit from the reforms. This can lead to economic assistance from stronger members of kinship networks to weaker ones or to a weakening of family ties. Certainly, social norms can resist the latter, but their strength vis-a-vis economic self-interest should not be exaggerated.
The fate of previously established ties of friendship is even more vulnerable to the forces of the systemic change taking place in Russia. As a microstructure, social networks undoubtedly undergo some transformation even if its scope is not yet clear. Ethnographic analysis suggests that both extremes are possible: some people preserve their pre-reform ties and do not acquire any new ones while others change their social milieu drastically (Ledeneva 1998; Lonkila 1997, 1998). Whatever outcome is the most likely, one implication of this ambiguity regarding social support is clear. There is no guarantee that any person will have a contact which will be willing and able to provide the right kind of help at the right time. To put it differently, the available data and analysis ignore the opportunity structure which has to be in place in order for friends and family safety nets to materialize. To address this issue systematically, we need data on the parameters of both the social and economic networks in which the actor is embedded. An adequate analysis has to bring together characteristics of the actor, its contacts, and the relationships between the former and the latter.
2. Data and Method
The data for this analysis was gathered within a large-scale survey of Russian households “New Forms of Employment, Job Creation, and Survival Strategies in Russia” carried out in four cities: Samara, Kemerovo, Lyubertsy, and Syktyvkar by the Institute for Comparative Labour Relations Research (ISITO) in April-May 1998. The uniqueness of the survey is the availability of both household and individual level data. In interviews with the heads of the households, we asked them to name the people with whom the household is involved in the most significant exchanges of monetary gifts, food, goods, and loans. Up to three people could be mentioned as recipients of the household’s help and the same number as its donors. We also solicited information on the types of exchanges and the total monetary value of items received and given. In the individual level questionnaire, each respondent had a chance to name his or her close friend, colleague, and the person whom he or she could resort to for help with a job search. The purpose of these questions was to indicate the respondent’s involvement in ongoing close social relationships with other people. We hypothesize that such relationships form the opportunity structure for informal economic exchanges, although we do not assume that necessarily the same people, mentioned as close contacts, will appear on the other side of the most significant economic transactions. In this sense, our data serve as an indicator of the networks’ presence rather than their precise picture. The limited scope of our network data is compensated by its depth. For each social and economic contact mentioned, we asked when and under what circumstances it originated and how close this relationship is now in term of frequencies of contacts.
For the purpose of this analysis, I distinguish three groups of households for each type of exchange. I call pure recipients those who receive the given type of help, but do not provide it themselves. Accordingly, pure donors are those who give, but not receive. Finally, recipients and donors do both, although, not necessarily with the same people. In the discussion below, I often refer to the third group of households as those who are involved in reciprocal transactions. This is consistent with the common notion of reciprocity which can be restricted and generalized (Ekeh 1974), i.e., limited to two parties or encompass a larger social group within which people make favors to not necessarily those who made favors to them.
With regard to each type of exchanges, a household can either belong to one of the groups described or to not be involved in such exchanges at all. I estimate the probability of each of these four possible outcomes using multinomial logit model.
3. Findings
Some evidence of the scope of social support is presented in Table 1:
Table 1 about here
Overall, 2,632 households or 65.4% of the sample are engaged in informal exchanges of money, food, and goods in one way or another. This is much higher than 39.7% and 36.0% found in the 1992 and 1993 RMLS data, respectively, by Cox et al. (1998). Our sample was drawn in four cities and therefore cannot be directly compared with the all-Russia representative sample of RMLS. It is worthwhile to note that the 1992 RLMS data by region show a wide variation in the involvement in private transfers between 70% in Novgorod City and 15% in Sverdlovsk region. At first glance, our findings of 65.4% of households involved in private transfers quite adequately correspond to the image of the Russia as a “network society” described above.
In our data set, Samara and Lyubertsy are the regions with consistently low participation in exchange networks relative to Kemerovo and Syktyvkar. Overall, 62.8% of the Samara households and 58.7% of the Lyubertsy households are involved in at least one type of such exchange, the same percentages for Kemerovo and Syktyvkar are 71.5 and 69.1 respectively. Exactly the same pattern is observed for each particular kind of exchange: money gifts, food, goods, and loans, as well as for any specific type of participation, as the findings in Table 1 suggest. The fact that Kemerovo and Syktyvkar are the cities which suffer most from non-payment of wages and wages in kind (Clarke 1998) points to a possible relationship between the demonetization of the Russian economy and the participation in economic exchange networks.
Tables 3-7 presents the estimates of multinomial logit models with the types of participation in support network – pure recipientship, reciprocal recipientship/donorship, and pure donorship – as alternative outcomes compared against non-participation as a reference category. First, I will interpret the effects of the control variables which re-create the context in which wage arrears and social ties influence informal exchange processes.
The composition of the household is a primary factor which differentiates families into givers and receivers of informal help. The finding that households led by men are less likely to be involved in any kind of exchanges confirms our general observation that Russian women are the most common intermediaries in support networks and, more generally, those who sustain family relationships with relatives and friends. All other things being equal, larger families show a lower likelihood of participating in informal exchanges of money gifts, food, and loans. Families whose heads have higher education are more involved in support networks as both recipients and donors in comparison with people with general secondary education. The evidence for the other educational categories is mixed.
Exploring the pattern of age dependency is crucial for understanding the structural foundations of informal support. Under normal circumstances, parents help their children under the tacit assumption that they will reciprocate in the future when the parents get old. This leads to a pattern of inter-generational reciprocity which, if indeed exists, should single out the young and elderly as the two age groups which are the most likely to be pure recipients of help. At the same time, the middle-aged group is more likely to be a donor. Is this pattern present during the Russian transition or is it collapsing under the pressures of an economic decline and demonetization which make the most economically active middle-aged generations incapable of taking care of themselves, not to mention their children and parents?
To answer this question, I specify a U-form of age dependency in the multinomial logit models. At first glance, the estimates obtained do identify the described pattern in all types of exchange except for loans and donorship of money. The coefficients for the variable ‘head’s age square’ are significant which points to the U-shape of age dependency. They are positive for recipientship and negative for donorship. Accordingly, young and elderly households are more likely to be recipients and less likely donors. However, because the models are non-linear it is difficult to see at what age the probability of recipientship hits bottom and the probability of donorship reaches the top. Table 10 provides such information for a hypothetical household of four with two children. Certainly, it is an oversimplification to assume that the composition of the household does not change over the life span of its head, but keeping other covariates constant is the only way to grasp the magnitude of the effects of specific variables.
The results in Table 10 confirm the pattern of inter-generational reciprocity in exchanges of food and goods. For example, the estimated probability of receiving food is equal .51 at age 18, goes down to .09 by the age 62 and increases to .11 by the time the head of the household is 75 years old. At the same time, the probability of food donorship is about .01 at age 18, reaches its maximum of .09 at age 61 and decreases to .07 at age 75. Overall, households appear to move from recipientship in kind to donorship in kind in younger ages and turn in the opposite direction when the head of the household is about 55-60 years old, i.e., enters the Russian retirement age.
The same pattern does not hold for monetary gifts. Statistical insignificance of the coefficient for the variable ‘head’s age square’ in Table 3 already suggests that the U-shaped age dependency for this type of donorship is unlikely to materialize. The findings in Table 10 confirm this conclusion: the probability to donate money increases from .04 at age 18 to .23 at age 75 and does not reach maximum even by age 80. On the other hand, the probability of receiving monetary gifts decreases from .42 at age 18 to the minimal .05 at age 73 and stay approximately on that level later on. To sum up, the elderly do not get financial support from their younger relatives and friends. On the contrary, they tend to serve as a source of such support themselves. The absence of comparable data for the pre-reform period does not allow me to argue with certainty that the pattern of inter-generational reciprocity is undermined. I can only say that the trend found points out to that direction.
The income from the primary and secondary jobs, pensions, public transfers, such as child support and unemployment benefits, and products from the dacha constitute the resources which each household has at its disposal. The descriptive statistics in Table 2 demonstrate that a substantial number of Russian households in the cities studied have such resources in their disposal. Overall, 39.3% of the households include pensioners, 25.5% receive public transfers other than pensions such as stipends, child support, and alimonies, 27.6% include secondary jobs holders, 52.7% own plots of land, 12.8% sell their personal belongings to raise additional income. The estimates from the multinomial logit models in Tables 3-7 show how these resources correlate with the recipientship and donorship statuses in support networks.