1. 1. A BOTTOM UP RESPONSE TO A TOP DOWN CRISIS: A Pan European Perspective PROFESSOR RICHARD ROSE Centre for the Study of Public Policy University of Aberdeen www.abdn.ac.uk/cspp The International Crisis and Post-Communist States University of Glasgow 13-14 May 2010 www.abdn.ac.uk/cspp CSPP RR-eccri-slw-.ppt 27.4.10

2. 2. WHERE IS THE CRISIS? Top down macro-economic or bottom-up household? Vulnerable countries An international stimulus: all countries equally affected Macro-economic: a crisis of banks, ministries of finance But vulnerability differs: CEE 10/ Northern 11/Med 6 Vulnerable people Micro-level: poor people, indebted people. All countries have some vulnerable and some secure people but proportions differ. RR-eccri-slw-.ppt 27.4.10

3. NorthernMed.CEE If you are In work; ergo you could become unemployed 50%46% Outside the labour force, you cant be unemployed43%47%42% A pensioner, you have a guaranteed, inflation-proofed income 23%18%24% More educated, less vulnerable 37%18%25% Holding a credit card, you could 46%30%35% have a debt Mortgage holder, you have debts 43%24%13% 3. VULNERABILITY DIFFERS WITH ECONOMIC STATUS Source: Eurobarometer 72.1, 27 EU countries, fieldwork Aug-Sept 2009, unweighted N=26,719 RR-eccri-slw-.ppt 27.4.10

4. NorthernMed.CEE Mean: (standard deviation) Higher GDP 2007 38,61819,7839,690 (13,823)(4,778)(3,642) Contraction 2008/9-5.2%-3.4%-8.1% (1.7)(1.5)(5.8) Inflation 2007 2.0%2.2%5.4% (0.5)(0.8)(2.7) Looser credit* 43%24%13% * % mortgage holders 4. VULNERABILITY DIFFERS BETWEEN COUNTRIES Sources: Access to credit: Eurobarometer 72.1, D46, 27 EU countries, fieldwork August-September 2009, unweighted N=27,719. Official economic statistics: Eurostat, http://epp.eurostat.ec.europa.eu/portal/page/portal/statistics/ search_database (accessed 1 April 2010). GDP: nominal Gross Domestic Product per capita in Euro per inhabitant; contraction: growth rate of real GDP per capita; inflation: annual average inflation rate. Averages for groups of countries weight each country equally. RR-eccri-slw-.ppt 27.4.10

5. 5. VULNERABLE COUNTRIES AND VULNERABLE PEOPLE HYPOTHESES H 1. If people are low in socio-economic resources, they are worse off. H 2. If people are vulnerable, they are worse off. H 3. If people live in poor countries, they are worse off. H 4. If people live in vulnerable countries, they are worse off. RR-eccri-slw-.ppt 27.4.10

6. 6. THE WOUNDED AND THE COPING The Dependent Variable Q 37. Which of the following best describes how your household is keeping up with all its bills and credit commitments at the moment? NorthMed.CEE Difference North-CEE (% respondents) No difficulty58253325 Okay but problems 303838-8 from time to time Keeping up a 93021-12 constant struggle Keeping up(97)(93)(92)(5) Falling behind with 2 5 6 -4 some bills Real problems, be- 1 2 3 -2 hind with many bills Falling behind(3)(7) (9)(-6) Source: Eurobarometer 72.1, Q37, 27 EU countries, fieldwork August-September 2009, unweighted N=26,719. Dont knows excluded. RR-eccri-slw-.ppt 27.4.10

7. b Std. ErrorBeta Social status-.24.00-.38*** Education-.13.01-.09*** Age.00 -.06*** Male-.05.01-.03*** Urbanization.04.01.03*** #nmi single space within each of three blocs Employed.02.01 Unemployed.36.02.10*** Pensioner-.16.02-.07*** Credit card access-.18.01-.18*** Mortgage holder-.01.01.00 7.THE EFFECT OF LOW RESOURCES, VULNERABILITY Dependent variable: Q # Difficulty paying bills R 2 =27.4% Source: Eurobarometer 72.1, Q37, 27 EU countries, fieldwork August-September 2009, unweighted N=26,719. (*** significant at.001, **.01, *.05 level) RR-eccri-slw-.ppt 27.4.10

8. Coeff.ErrorT-ratio #GDP change 2008/90.010.02 0.82 # see semail % with mortgages-1.110.28 -4.00*** Social status-0.220.01-19.08*** Education-0.060.01 -4.87*** Age-0.0020.00 -3.80*** Male-0.060.01 -4.17*** Urbanization0.010.01 1.32 Unemployed0.360.03 12.17*** Pensioner-0.150.02 -7.55*** Credit card access-0.170.01-13.63*** Sources: Eurobarometer 72.1, Q#fieldwork August-September 2009, 27 EU countries, unweighted N=26,719. #amend/ delete as appropriate. GDP change 2008/9: Eurostat, http://epp.eurostat.ec.europa.eu/portal/ page/portal/statistics/ search_database, (accessed 1 April 2010) (*** significant at.001, **.01, *.05 level) 8. DIFFICULTIES IN CONTEXT Hierarchical Linear Model: pseudo R 2 =29.7% RR-eccri-slw-.ppt 27.4.10

9. 9. IS RUSSIA DIFFERENT COMPARED TO CEE COUNTRIES? CEE Russia mean Keeping up difficult 9%25% GDP change 2008/9-8.1%-7.9% Has mortgage 13%1% Can get credit card, bank 35%40% loan Sources: Eurobarometer 72.1, Q37, fieldwork August-September 2009, 10 CEE countries, unweighted N=10,144; New Russia Barometer XVIII, A6, fieldwork 18-24 June 2009, unweighted N=1,601. GDP change 2008/9: Eurostat, http://epp.eurostat.ec.europa.eu/ portal/page/portal/statistics/ search_database (accessed 1 April 2010); for Russia: World Bank, Russian Economic Report No. 21 (March 2010), p.5. RR-eccri-slw-.ppt 27.4.10

10. CEERussia Beta Social status-.41***-.25*** Education-.06***.01 Age-.04**-.03 Male-.03***-.10*** Urbanization.03***-.04 Employed.01-.01 Unemployed.11***.08** Pensioner-.05**.01 Credit card access-.18***-.20*** Mortgage holder.08***-.02 R-squared:28.0%14.4% 10. COMPARING INFLUENCES ON HOUSEHOLD DIFFICULTIES Ordinary least squares regressions Source: Eurobarometer 72.1, Q37, fieldwork Aug-Sept 2009, 10 CEE countries only, unweighted N=10,144. New Russia Barometer XVIII, A6, fieldwork 18-24 June 2009, unweighted N=1,601. (*** significant at.001, **.01, *.05 level) RR-eccri-slw-.ppt 27.4.10

11. 11. HOW MUCH CHANGE IN RUSSIA SINCE BEFORE THE CRISIS ? Q. Do you get enough money from your main source of income to buy what you really need? 20072009 Difference (% respondents) Definitely enough550 Just enough20200 Not quite enough49501 Definitely not enough2625-1 Sources: New Russia Barometer XV, A6, fieldwork 13-23 April 2007, unweighted N=1,606; New Russia Barometer XVIII, A6, fieldwork 18-24 June 2009, unweighted N=1,601. Dont knows excluded. For a discussion of political effects, see R. Rose and W. Mishler, "The Impact of Macro-Economic Shock on Russians", Post-Soviet Affairs, 26, 1. RR-eccri-slw-.ppt 27.4.10

12. EUROBAROMETER 72.1MinimumMaximumMeanSDev Difficulty keeping up commitments 1 no difficulties5 real problems1.91.97 Unemployed0 no1 yes.08.27 Pensioner0 no1 yes.22.42 Credit card access1 very difficult4 not at all difficult3.03.97 Education year stop1 15 or less3 20 +2.09.68 Male0 female1 male.48.50 Age15 years80+4518 Town size1 rural3 large town1.92.79 Mortgage holder0 no1 yes.28.45 Self-assessed status1 lowest level10 highest5.611.51 12. VARIABLE LISTS NEW RUSSIA BAROMETER XVIII Difficulty keeping up1 no difficulties4 very difficult2.95.80 Social status1 lowest7 highest3.241.22 Education level1 primary or less8 university5.121.96 Age18 years70+4416 Male0 female1 male.45.50 Urbanization1 village5 Moscow2.591.27 Employed0 no1 yes.52.50 Unemployed0 no1 yes.06.24 Pensioner0 no1 yes.23.42 Access to bank credit1 definitely no4 definitely yes2.26.99 Has a mortgage0 no1 yes.01.08 Sources: Eurobarometer 72.1, fieldwork Aug-Sept 2009, 27 EU countries, unweighted N=26,719. New Russia Barometer XVIII, fieldwork 18-24 June 2009, unweighted N=1,601; GDP change 2008/9: Eurostat, http://epp.eurostat.ec.europa.eu/portal/page/portal/ statistics/ search_database (accessed 1 April 2010). AGGREGATE-LEVEL (EU27) GDP change 2008/9, % -17.60 1.70 -5.89 4.06 % with mortgages 3 58 28 16 RR-eccri-slw-.ppt 27.4.10