Regions of Russia during a pandemic: Socio-economic dynamics and budget revenues

Abstract

It is difficult to identify the most and the least affected regions in the pandemic crisis, since the dynamics of different indicators did not coincide. Industrial output decline was deeper in oil-extracting regions. Agglomerations of federal cities, recreation regions of the South and the republics of the North Caucasus had the strongest decline in the service sector. The dynamics of labor markets in the regions during the pandemic strongly depended on institutional factors – state support for employed in small businesses and assistance to the unemployed. Small business employment in most regions did not decline. The level of registered unemployment grew faster in the largest agglomerations, and the slowest emerging from the crisis were the underdeveloped republics. After a strong decline in the population incomes in the 2nd quarter of 2020 due to lockdowns, a gradual convergence of regional dynamics began, but without a noticeable improvement. In terms of population income and employment, Moscow is recovering from the crisis much faster thanks to its huge competitive advantages. The dynamics of own revenues of regional budgets during pandemic is associated with the structure of the economy and the importance of profit tax in the budget revenues. The largest losses in 2020 were experienced by the oil-extracting regions due to a sharp reduction in profit tax. Since 2021, the own revenues of the budgets of metallurgical regions grew the fastest due to a threefold increase in this tax. Lockdowns in the first wave of the pandemic turned out to be less significant because the number of regions with a decline in their own revenues in the 2nd quarter of 2020 was 1,5 times less than in 2020.