List of Berkeley-Duke Occasional Papers
on the Second Economy in the USSR
with Abstracts and Notes

The core of our research has been published in the series of BERKELEY-DUKE OCCASIONAL PAPERS ON THE SECOND ECONOMY IN THE USSR (edited by Professors Gregory Grossman and Vladimir G. Treml; Professor Michael Alexeev joined the editorial board in 1992)

Altogether, 26 individual authors contributed 51 separate papers to the Occasional Paper series Nos 1 through 38 over the period between 1985 and 1993. Nikolai Malyshev, Clifford G. Gaddy, and Kimberly Neuhauser, all of Duke University, have served as technical editors of the series.

More than half of Occasional Papers used data provide by the Berkeley-Duke questionnaire and a brief summary of the survey given below eliminates the need to repeat the description of the survey in each abstract.

The questionnaire was administered to 1,061 households (including singles individuals) covering 3,023 emigres (2,301 adults) who left the Soviet Union and settled in the United States between 1971 and 1982. The largest group -- 85 percent -- left the USSR between 1976 and 1979. The ethnic composition of the sample was as follows: 53 percent were Jews, 22 percent Armenians, 18 percent Slavs, and 7 percent others. Practically all respondents had lived in urban areas of eleven Soviet republics (Kazakhstan, Kirgizia, Turkmenistan, and Tadzhikistan were not covered). Specially trained interviewers asked emigre respondents detailed questions about household/family composition, education, occupation, wealth, housing conditions, income and expenditures covering both the state and private or "second economy" spheres of activities, bank and other forms of savings, pensions, alcohol consumption, and automobile ownership. A separate part of the questionnaire asked about second economy incomes in selected occupations as perceived by respondents. Statistical data employed by researchers for normalization of survey-derived data are presented in Occasional Papers No. 7 and 7a.

Citations for revised papers published subsequently in compendia or journals are given in square brackets.

The cost of preparation and distribution of the first 20 Occasional Papers was partially funded by a grant from the National Council for Soviet and East European Research, Washington, DC. Starting with issue # 15 BDOPs have been printed and distributed by The WEFA Group, Bala-Cynwyd, Pa.

The list of occasional papers follows:

1. Gregory Grossman. "The Second Economy in the USSR and Eastern Europe: A Bibliography." September 1985. 13 pp. [superseded by Paper No. 21].

2. Gregory Grossman. "Inflationary, Political and Social Implications of the Current Economic Slowdown." September 1985. 40 pp. [Also in H. H. Hoehmann et al., eds., Economics and Politics in the USSR: Problems of Interdependence. Westview Press, 1986.]
ABSTRACT: Since 1979, the Soviet Union has experienced not only declines in growth rates of major real economic indicators, but also, less noticed, a considerable rise in its money supply. We contend that the latter is a systemic consequence of the slowdown. Certain social and political effects have ensued, including redistribution of private income and wealth. These developments reduce the manageability of the economy and impinge on prospects of economic reform. Growth in money supply is estimated by partial reconstruction (through 1983) of the consolidated annual balance sheet of the Soviet banking system on the basis of sparse official data.
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3. Vladimir G. Treml. "Purchase of Food from Private Sources in Soviet Urban Areas." September 1985. 48 pp.
ABSTRACT: The study is focused on private food sales in free urban kolkhoz markets and by private street food vendors in the USSR in 1977 based on Berkeley-Duke emigre survey. Total sales were estimated at 35.5 billion 1977 rubles, that is almost five times higher than reported for urban kolkhoz markets sales in official state statistical sources. The author speculates that this unusually large discrepancy was produced by exclusion of some markets (small towns, railroad stations, etc), by undercounting of physical quantities of produce, and understatement of their prices in official statistics; the probable sampling error in the estimate was believed to be relatively small.
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4. Gregory Grossman. "A Tonsorial View of the Soviet Second Economy." December 1985. 48 pp. [Also in Peter Wiles, ed. The Soviet Economy on the Brink of Reform. Unwin Hyman, 1988.]
ABSTRACT: This paper employs an indirect method to estimate average hourly wages of unskilled labor in the Soviet second economy (SE) in different localities. It makes use of the empirical finding by Jean Fourastie (1949) that everywhere [in market economies] the price of a man's haircut is approximately equal to the hourly pay of unskilled labor in that locality. The Soviet SE is a market economy, so this regularity should hold. In Soviet (state-owned) barbershops, tips were generally very high in relation to the fixed prices, in effect transporting the transaction into the SE. The data, pertaining to the late 1970s, come from the Berkeley-Duke questionnaire survey of 1,061 Soviet emigrant families from the USSR, including over 191 Armenian families from Armenia. We find that the average hourly wage of unskilled labor, so estimated, tended to be a multiple of the then official minimum hourly wage (plus payroll tax). Expectedly, it was lower in six major European cities than in Transcaucasia and Central Asia, and, in the north, lower in smaller cities and towns than in major cities. Estimates of side earnings of barbers were also obtained from our data.
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5. Vladimir G. Treml. "Alcohol in the Soviet Underground Economy." December 1985. 65 pp. . [Reprinted in part as "Piteinyi standart rublya,"in Ekonomika i organizatsiya promyshlennogo proizvodstva, 1990, 10, 137-144, Novosibirsk, USSR.]
ABSTRACT: The study describes and analyzes illegal economic activities related to production and distribution of alcoholic beverages. In the 1970s, the study identifies such activities as production and distribution of home-distilled moonshine (Russian "Samogon"), home production of grape and fruit wine and beer, resale of state produced beverages by private middlemen, and theft of ethanol from state enterprises for private use and some supporting activities. The high profitability of illegal alcohol distillation is explained by low private production costs and high prices of state manufactured and taxed beverages. Failure of law enforcement agencies to eradicate illegal alcohol production is explained by ubiquitous nature of the phenomenon. The wide use of vodka (legal and illegal) as the second (commodity) currency, particularly in second economy markets and illegal transactions, is described. A separate part of the paper addresses the methodology of national income accounting of illegal activities related to alcohol. Net private revenues generated by these activities in 1979 were estimated at 14 billion rubles or 2.2 percent of adjusted Gross Domestic Product (5 percent of consumption).
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6. Mervyn Matthews. "Poverty and Patterns of Deprivation in the Soviet Union." June 1986. 75 pp.

7. Vladimir G. Treml. "Referent USSR Economic and Demographic Statistics for the Normalization of Berkeley-Duke Emigre Questionnaire Data." June 1986. 214 pp.

7A. Michael V. Alexeev, Clifford G. Gaddy, Kimberly C. Neuhauser, and Vladimir G. Treml. "Appendices to BDOP No. 7:
1) Update to Referent USSR Economic and Demographic Statistics, and 2) Statistics on State-Provided Consumer Services in the USSR." October 1989. 24 pp.
ABSTRACT: Compilation of Soviet statistics to be used in normalization of data derived from the Berkeley-Duke emigre survey covering demographics, education, labor and wages, national income, pensioners and pensions, privately owned automobiles, residential housing, urban bank savings, medical personnel, and consumer services for the late 1970s. Most statistics are from official Soviet sources such as population censuses and Goskomstat statistical compendia but estimates of unavailable data are also presented.
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8. Michael V. Alexeev. "Factors Influencing Distribution of Housing in the USSR." December 1986. 47 pp. [Also in Revue d'Etudes Comparatives Est-Quest 19:1,5-36.]
ABSTRACT: The paper uses both the published Soviet data and the results of the Berkeley-Duke family budget survey of immigrants from the USSR to analyze the factors affecting the distribution of urban residential housing in the former Soviet Union. While residential housing was one of the most strictly rationed goods in the Soviet Union, the system of housing allocation lent itself to corruption and preferential treatment of certain customers. The paper describes in detail housing conditions of the Berkeley-Duke survey respondents. It also discusses the ways in which the second economy affected housing allocation. Then, a simple econometric procedure is applied to different types of housing in the Berkeley-Duke survey sample. The regression analysis shows that money income, independently of household status, exerts a strong influence on the distribution of urban housing in the USSR, including state-owned dwellings. This suggests that administrative rationing of housing in the Soviet Union was often replaced by market forces. In fact, it is show that income elasticity of consumption of state-owned housing is virtually the same as that of cooperative and private housing. Soviet households managed to bypass the strict rules of housing allocation and obtain the amount of housing which corresponded at least to some extent to their monetary wealth. Even under the Soviet circumstances most favorable for administrative rationing, consumers were able to "beat the system."
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9. Selected Topics on the Second Economy. April 1987. 110 pp.:

Michael V. Alexeev. "Underground Market for Gasoline in the USSR." [Also in Comparative Economic Studies 30:2, 47-68.]
ABSTRACT: The paper uses the Berkeley-Duke family budget survey and information published in the USSR in the mid-1980's to estimate the size of the black market for gasoline in the late 1970's. Consistent with the earlier estimates by the same author ("Illegal Gasoline Consumption in the Soviet Union," Radio Liberty Research Bulletin, RL 240/81, June 1981), the paper finds that the share of black market in the total consumption of gasoline in the urban areas of the USSR lied between 33 percent and 65 percent. In addition, the sales of gasoline by the drivers of state-owned cars and trucks are estimated to have about doubled between 1977 and 1984. These sales added about 75-100 rubles to the professional drivers' incomes in 1984.
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Gregory Grossman. "A Selected Bibliography on the Second Economy in the Soviet Union (Revised and Updated)." [Superseded by Paper No. 21.]

Demosphenes J. Peterson. "The Number and Cost of Illegal Abortions in the USSR."

Vladimir G. Treml. "Personal and Disposable Income--Urban USSR, 1979."
ABSTRACT: The study estimates personal and disposable income of the urban population of the USSR in 1979 to be used in normalization of emigre survey data. The data are based on CIA estimates for the entire country with some corrections and adjustments and on official Soviet statistics.
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10. Karl-Eugen Wädekin. "Private Agriculture in Socialist Countries: Implications for the USSR." April 1987. 36 pp. [Also in Kenneth Gray, ed., Contemporary Soviet Agriculture. Iowa State University Press, 1989.]

11. Studies on the Soviet Second Economy. December 1987, 90 pp.:

Michael V. Alexeev and Ali Sayer. "The Second Economy Market for Foreign Made Goods in the USSR."
ABSTRACT: Using the data from the Berkeley-Duke family budget survey of immigrant from the USSR, the paper estimates of the size of the market for foreign-made goods sold outside of the regular, state-run stores in the late 1970's. The estimates cover only urban areas and include both the so-called commissary (komissionnye) stores and the goods sold privately. The data suggest that the turnover in this market was approximately 13-15 billion rubles per year. The goods brought from abroad by friends or family members account for another 3-5 billion rubles. The paper also evaluates the factors influencing consumption of foreign-made goods by estimating multivariate linear and loglinear regressions. Not surprisingly, income is found to be the major determining factor. Other statistically significant factors include per capita value of parcels received from abroad (negative) and the share of second economy income in total household income (positive).
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Gregory Grossman. "The Second Economy: Boon or Bane for the Reform of the First Economy." [Also in Stanislaw Gomulka et al., Economic Reforms in the Socialist World, Macmillan, 1989.]
ABSTRACT: The structure of informal relations and property rights delineating the Soviet second economy (SE) is summarized. The SE furthers the cause of reform(s) in various ways. It has been a living example of a viable alternative to the official centralized-command-planned system; it demonstrated that free (if black) price reflects social value; it helped dispel the notion that Soviet rule has irretrievably extirpated private initiative and enterprise; it has stressed the centrality of trust in commercial and financial relations, so important for the appearance of legalized market; it has promoted acquisitive, consumerist, and materialist tendencies in the population. Yet, on the negative side, it has bred cynicism and disrespect for law, has promoted corruption, and has created powerful vested interests determined to oppose reforms.

Nikolai Malyshev. "Laundering of Money in the USSR Through the Purchase of Winning Bonds and Lottery Tickets."

Vladimir G. Treml. "Income from Private Services Recognized by Official Soviet Statistics." ABSTRACT: The study speculates that official Soviet surveys of household budgets were changed to reflect other forms of income not previously recognized.
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12. Christopher Davis. "The Second Economy in Disequilibrium and Shortage Models of Centrally Planned Economies." July 1988. 148 pp.

13. Stanislaw Pomorski. "Privatization of the Soviet Economy under Gorbachev I: Notes on the 1986 Law on Individual Enterprise." October 1988. 32 pp.

14. Misha Belkindas. "Privatization of the Soviet Economy under Gorbachev II: 1. The Campaign against Unearned Income. 2. The Development of Private Cooperatives." April 1989. 99 pp.
ABSTRACT. The paper examines two important issues of Gorbachev's era: the state campaign against the so-called unearned income and the development of private cooperatives. In the first part the paper deals with legal and economic definitions of "unearned" income, provides examples of major cases and their coverage by the media. The second part of the paper discusses the 1987 Law on Private Cooperatives, their functioning, and taxation. Statistics on the development of private cooperatives by sector of activity and by republic are included.
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15. Kimberly C. Neuhauser and Clifford G. Gaddy. "Estimating the Size of the Private Service Economy in the USSR." July 1989. 30 pp.

16. David J. Sedik. "Connections and Consumption in the USSR." September 1989. 40 pp.
ABSTRACT: This study is devoted to the modeling and measurement of connections and their role in consumption in the USSR. A simple model of an economy which incorporates connections is considered and used as a basis for discussion of data in the Berkeley-Duke emigre questionnaire on the second economy in the Soviet Union. The money value of connections used for purchases in state and cooperative stores is compared with the amounts a typical consumer expends on other means of purchasing deficit goods. This comparison indicates that connections are at least as important as monetary side payments for such purchases. Connection payments seemed to be more important for the poorest and richest individuals in the sample considered. The benefits from a well-connected job seem to be a significant factor in job choice in the Soviet economy. Grossman's hypothesis regarding the negative correlation between side earnings and official wages was tested as extended to connections. The results of this test indicated that the money value of connections fluctuates inversely with the level of official wage income.
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17. Gregory Grossman. "Sub-rosa Privatization and Marketization in the USSR." November 1989. 9 pp. [Also in Annals of the American Academy of Political and Social Science, # 507, January 1990.]
ABSTRACT: In the USSR, conditions for private economic underground activity have been highly propitious. Under Gorbachev, the underground economy has increased markedly despite measures both to suppress and to legalize it. Illicit business and above-ground political and administrative power have tended to fuse, and to spawn organized crime. State property is widely misappropriated and exploited for private gain, particularly via private or camouflaged (crypto-private) firms.
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18. Clifford G. Gaddy. "The Size of the Prostitution Market in the USSR." January 1990. 46 pp.
ABSTRACT: Taking advantage of the new policy of openness in the Soviet media, this study pieces together recently published information on the previously unmentionable topic of prostitution to derive estimates of the size of the female prostitution market in the USSR. It is conservatively estimated that in urban areas alone there are in the Soviet Union 5,800-8,500 professional prostitutes serving foreigners and another 14,000-40,000 serving Soviet citizens. These prostitutes earn approximately 300-1,800 million rubles in gross revenues, making the prostitution "industry" a sizeable component of the underground economy, albeit much smaller than other illegal activities such as production and sale of alcohol and narcotics.
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19. Michael V. Alexeev. "Retail Price Reform in a Soviet-Type Economy: Are Soviet Reform Economists on a Right Track?" February 1990. 24 pp.
ABSTRACT: Some Soviet economists have suggested that the elimination of subsidies for consumer goods and services, would not only raise the price level in the state retail trade, but would also cause runaway inflation in the second economy markets. The paper uses a model of a queue-rationed centrally planned economy with Cobb-Douglas utility functions and with fixed output to analyze the possible consequences of price reform for consumer welfare. The relationship between prices in state retail trade (the first market) and those in private and cooperative trade (the second or black market) is also examined. The analysis suggests that the elimination of subsidies in the Soviet state-run retail trade, and price increases for rationed goods in particular, are not likely to produce a burst of inflation in black markets even when these increases are accompanied by monetary compensation. In fact, it is quite possible that black market prices would remain largely the same as before price reform or even decline. In addition, price reform with or without monetary compensation leads to greater demand for leisure and, therefore, to shorter queues throughout the system. The welfare implications are, however, ambiguous. The small price increases alone, or with inadequate monetary compensation, do not necessarily lead to a Pareto-improvement even in a compensated sense. Even when the aggregate monetary compensation is adequate and a post-reform equilibrium allocation is Pareto-superior in a compensated sense to the pre-reform one, it may be difficult to assure that every consumer or even group of consumers actually benefits from reform. It is even more difficult to avoid the perception of unequal treatment of different groups of consumers with respect to a monetary compensation. A reform under which some groups of the population benefit more than others, especially if the distance between the currently well-off groups and everyone else increases, may be politically unacceptable. Finally, the paper discusses the influence of price reform on monetary incentives for work in the economy.
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20. Vladimir G. Treml. "Study of Employee Theft of Materials from Places of Employment." June 1990. 24 pp.
ABSTRACT: The study is focused on the well known phenomenon of employee theft of materials from their places of employment for personal use or for resale. The estimates are based on the hypothesis that nominal Soviet wages were below market clearing level and that workers brought their wages up by supplementing them with stolen materials and goods. About 51 knowledgeable Soviet specialist were asked to rank 28 branches by the level of theft of materials by employees. This ranking proved to be negatively correlated with a ranking based on nominAL wages, i.e., the higher the wage the lower the theft. Based on this relationship and some supplementary data the average theft was calculated at about 40% of the average nominal wage.
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21. Gregory Grossman. "The Second Economy in the USSR and Eastern Europe: A Bibliography (with a Bibliography of Recent Polish-Language Works on the Second Economy of Poland, by Bohdan Wyznikiewicz)." July 1990. 22 pp.

22. Soviet Producer Goods Auctions. September 1990. 73 pp.
1) Y. Chernisheva and M. Rozhkov. "The Beginnings of Producer Goods Auctions in the USSR."
ABSTRACT: A series of auctions were conducted in 1989 by GOSSNAB, a Soviet government trading agency. These auctions, held in a number of cities of the USSR, were primarily for auto accessories, spare parts and construction materials. A study of these auctions reveals A series of auctions were conducted in 1989 by GOSSNAB, a Soviet government trading agency. These auctions, held in a number of cities in the USSR, were primarily for auto accessories, spare that they can only be viewed as an embryonic institution of market relations because of their sporadic nature, the heterogeneous goods on offer, as well as their similarity to auctions of rare goods. An examination of the sequence of bidup rates, defined as the ratio of the bid price to the floor price, for repeated lots, helps in evaluating the degree of shortage of specific goods in the overall economy, as well as the specifics of buyers and sellers, the regional disparities, possibility of collusion and information dissemination. In order to evaluate the possibility of utilizing auctions to study market conditions it is necessary to conduct them on a regular basis and for significantly larger volumes. It may then be possible to gauge the expected movement of free prices.
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2) Ashok Bardhan and Gregory Grossman. "A Producer Goods Auction."
ABSTRACT: The paper studies a producer goods auction carried out by MOSGORGLAVSNAB, a Moscow based commercial organization, in April 1989. The auction was conducted with a view to keep some goods off the black market, get an indication of "real" prices, and to raise money. The bid prices of most goods, which included trucks, machine tools, construction materials, as well as some consumer goods, were substantially higher than the administered fixed prices. A number of variables, such as the bid price, the floor price, surcharge on cooperatives and businessmen, the administered price, trading volumes, as well as various ratios and markups are analyzed in order to study the supply and demand side factors. The presence of the nascent private sector at the auction is given particular attention. The application of general auction theory, the resale and profit opportunity for cooperatives, the expectations of authorities, as well as of the participants, help in understanding the relationship of final auction prices to the official ones in the command economy. A number of beliefs about the Soviet economy, such as repressed inflation, shortages in both consumer and producer goods, relative affluence of the private sector are borne out and clarified by the data.
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23. Kimberly C. Neuhauser. "The Market for Illegal Drugs in the Soviet Union in the Late 1980s" with a foreword by Misha B. Levin. November 1990. 106 pp.
ABSTRACT: This paper is based on a survey of the voluminous Soviet literature on narcotics and some interviews. Drug abuse appears to be a rapidly growing problem in the Soviet Union, and is gaining attention from many economists, sociologists and the leadership, especially as the USSR enters a period of rapid economic, social and political change. Production, regional distribution, and prices of narcotics are discussed. The author estimates that in the late 1980s the number of actual users of illegal drugs was between 600,000 and 1.65 million, and that the market value of the illegal drugs consumed in the USSR was between 5.5 and 18.1 billion rubles. This makes the market for illegal drugs an important part of the underground economy in the Soviet Union.
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24. Clifford G. Gaddy. "The Labor Market and the Second Economy in the Soviet Union." January 1991. 66 pp.
ABSTRACT: This paper examines the interaction between the formal and informal parts of the labor market in the USSR based on data from the Berkeley-Duke survey. Three main findings are reported:
       (1) Soviet workers adjust their official incomes and working hours by various informal mechanisms, including stealing time, pilfering goods and materials from the work place, and moonlighting in the second economy. Results of this analysis suggest that Soviet workers perceive the formal and informal components of their compensation in the first economy as equivalent.
       (2) For both men and women, the labor supply curve in the second economy is forward-bending. As hourly earnings in second economy activity go up, both men and women supply more hours to the second economy.
       (3) There is a clear asymmetry in household decision-making. When making his decision on participation in the second economy, the typical Soviet husband regards his wife's income as indistinguishable from his own; yet his decision takes no account of her hours of work. For the wife, the situation is reversed: she must take into account her husband's work burden when making her decision to moonlight in the second economy.
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25. Michael V. Alexeev and Clifford G. Gaddy. "Trends in Wage and Income Distribution under Gorbachev: Analysis of New Soviet Data." February 1991. 31 pp.
ABSTRACT: This paper applies a simple non-parametric statistical estimation technique based on Kolmogorov-Smirnov test to fit the new Soviet data to a lognormal distribution, thus making it possible to estimate Gini coefficients for wages and income nationally and by republics.
       Analysis of the estimates shows that wage inequality in the Soviet Union has increased during the Gorbachev era, and that both wage and income inequality are higher in the poorer, Southern republics of the USSR than in the North. Also, using the data from the Berkeley-Duke family budget survey of immigrants from the USSR, the paper concludes that illegal (unreported) private income exacerbates these same trends.
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26. Kevin Block. "Depoliticizing Ownership: An Examination of the Property Reform Debate and the New Law on Ownership in the USSR." March 1991. 24 pp.
ABSTRACT: For years, Soviet ideologues emphasized the political consequences of ownership while ignoring its economic function. Property reform represents an effort to overcome that legacy, to reemphasize economics by depoliticizing ownership. This paper starts by summarizing the early efforts to reform the structure of ownership in the Soviet Union. In the resulting heated ideological debate conservatives accused reformers of betraying socialism by divesting the state of the means of production and reformers retorted that state ownership has failed economically, and that new forms of property must be devised if socialism is to remain a viable political choice.
       The paper first examines the politization of ownership as reflected in Soviet law. Next, the paper analyzes the new Law on Ownership in the USSR (July, 1990), and briefly assesses winners and losers. It concludes with an overview of the December 1990 Law on Ownership in the RSFSR enacted by the reform-minded RSFSR Supreme Soviet.
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27. Gregory Grossman. "Wealth Estimates Based on the Berkeley-Duke Emigre Questionnaire: A Statistical Compilation." May 1991. 61 pp.
ABSTRACT: A tabular presentation of findings regarding size, composition, and distribution of household wealth in the USSR, in the late 1970s, in the sample of 1,061 families of recent emigrants surveyed by the Berkeley-Duke Project on the Soviet Second Economy. Wide spatial coverage, including a substantial sub-sample of Armenian emigrants from Soviet Armenia.

28. Erik Weisman. "Expenditures for Religious Services by the Soviet Population." June 1991. 80 pp.
ABSTRACT: Soviet national income accounts do not include income generated by religious organizations. Considering the estimated 90-115 million believers in the USSR, the omission of religious income is significant. This study estimates that the annual income generated by religious organizations in the Soviet Union in the mid 1980's was approximately 3-8 billion rubles.
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29. Michael Burawoy and Kathryn Hendley. "Strategies of Adaptation: A Soviet Enterprise under Perestroika and Privatization." June 1991. 66 pp.

30. Clifford G. Gaddy. "Uncovering the `Hidden Wage': Public Perceptions of Opportunities for Side Income in Various Occupations in the USSR." November 1991. 56 pp.
ABSTRACT: This paper uses Berkeley-Duke emigre questionnaire data to analyze and quantify respondents' perceptions of opportunities of side (second economy) income in different occupations in the USSR in the late 1970s. The paper also addresses such issues as the determinants of perceptions of side incomes, how well these perceptions accord with reality, and estimates the growth of income in the second economy over the previous decade.
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31. Michael V. Alexeev. "Expenditures on Privately Rented Housing and Imputed Rents in the USSR." November 1991. 24 pp.
ABSTRACT: The paper describes the market for private rental housing in the urban areas of the USSR in late 1970s and, using the Berkeley-Duke survey data, estimates the imputed rents on owner occupied housing. It is argued that the average rent on a privately rented apartment was close to 25 rub/sq.m. far exceeding the 1.46 rub/sq.m. figure used by the CIA to impute rents in the Soviet GNP accounts. The resulting total imputed rent for 1977 is estimated at 9.69 billion rubles. This number includes the costs of maintenance and repairs. The estimates also imply that the Soviet urban dwellers paid (and received) close to 1.5 billion rubles for privately rented housing in 1977. The paper also provides estimates of the inflation in the rental housing market. It is found that the rents for individually owned housing in the USSR must have more than doubled, perhaps even tripled, between 1977 and 1990. The market for summer houses (dachas) is also discussed briefly.
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32. Anna Meyendorff. "The Black Market for Foreign Currency in the USSR." December 1991. 41 pp.

33. Vladimir G. Treml. "A Study of Labor Inputs into the Second Economy of the USSR." January 1992. 53 pp.
ABSTRACT: The study was based on the Berkeley-Duke emigre survey which provided information on the use of time by working and nonworking adults in 1979. The working respondents reported the number of hours taken off during regular working hours for personal pursuits per month (e.g., shopping, medical appointments), for remunerative second economy activities, and hours of private work during their free time; the first two categories were viewed as "employees' theft of time from state employers." The nonworking adults reported the number of hours spent in second economy activities. Different patterns of time use in large and small cities were investigated. Estimates for the urban population of the USSR suggested that men spent 13.7 and women spent 9.9 percent of their total working time engaged in second economy activities, with total working time defined as the sum of hours spent in state second economy work.
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34. Valeriy M. Rutgaizer. "The Shadow Economy in the USSR.
1) A Survey of Soviet Research,
2) Sizing up the Shadow Economy: Review and Analysis of Soviet Estimates." February 1992. 73 pp.
ABSTRACT: A comprehensive survey of unofficial academic research and journalistic descriptions of various "shadow" (second economy) phenomena undertaken in the Soviet Union from mid-1980s to early 1990s. The author, a prominent Soviet economists and one of the pioneer among the second economy analysts, examines inconsistencies in definitions used by Soviet observers, confusing accounting methodology, the wide range of ruble estimates, and the lack of consensus of the importance and the impact of the second on the first economy. (Translated from Russian.)
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35. Kimberly C. Neuhauser. "The Second Economy in Funeral Services." February 1992. 35 pp.
ABSTRACT: This study focuses on payments made by Soviet households for services related to funerals. Although the state officially provides funeral services at low fixed prices, it is evident that significant additional payments (in cash or in kind) are made by Soviet households for these services. These expenditures may comprise one or some combination of the following: 1) tips and bribes to employees of the state funeral services facilities; 2) payments to private individuals for services such as grave digging, arranging a wake or for flowers; and, 3) donations for religious ceremonies.
       Funeral services are shown to generate significant unofficial incomes in the Soviet Union. The total expenditure by the population for official funeral services in urban areas was approximately 96.2 million rubles in the late 1970s. In that same period, the value of payments to private individuals for "unofficial" services related to funerals and burials is estimated to have been between 342 and 517 million rubles annually in urban areas.
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36. Vladimir G. Treml and Michael V. Alexeev, " The Second Economy and the Destabilizing Effects of its Growth on the State Economy in the Soviet Union, 1965-1989," December 1993, 76 pp. [published as "The Growth of the Second Economy in the Soviet Union and Its Impact on the System," in The Postcommunist Economic Transformation. Essays in Honor of Gregory Grossman, edited by Robert W. Campbell, Westview Press, Boulder, Co, 1994 pp. 221-247]
ABSTRACT: The authors conclude that the rapid growth of the illegal underground economy in 1970s and 1980s has distabilized the Soviet state economy and weakened the mechanism of central controls and planning in the consumer sector. This hypothesis is advanced on the basis of the examination of striking decline in income elasticities of demand for a number of consumer goods in state retail trade in some 72 regions in Russia and 26 regions in Ukraine in the period between 1965 and 1989. Money income data used in the study cover only funds from legal sources, i.e., excluding second economy sources; purchases of consumer goods also cover only legal state markets. It is reasonable to conclude that as private incomes and consumer purchases in private markets expanded over time the correspondence between state incomes and expenditures in state markets in separate regional areas would decline. Products and services covered in the study are meat, milk, sugar, fish, bread, different type of alcoholic beverages (in liters and in rubles), consumer services, and public dining as well as ruble aggregates such as total retail consumer trade and trade in food and nonfood goods. The relationship between money income and bank savings were also examined producing similar results, i.e., decline in income elasticities over time.
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37. Michael Alexeev, Jim Leitzel, and William Pyle, "Essays on the Second Economy Markets." December 1993, 53 pp.

       Michael Alexeev, "A Ruble is a Ruble. Or is it?"
ABSTRACT: The paper argues that while in the former USSR, as in other economies, household income was an important explanatory variable in the analysis of consumer choice, Soviet household income from various sources could not usually be lumped together. Wage and other income generated within the socialist sector often had significantly different from all other income effects on household behavior. The paper uses a simple econometric procedure to investigate the difference between rubles earned in the state-controlled socialist sector of the Soviet economy and rubles obtained from other sources. This difference probably occurred for one of the following three reasons which do not need to be mutually exclusive: (1) socialist income may be a proxy for some other relevant explanatory variable, such as official status within society; (2) socialist income is considered to be permanent while second economy income is viewed as transitory (or vice versa); or (3) second economy income may be a proxy of the respondents' involvement in second economy activities. The paper conducts a regression analysis of savings patterns, purchases of foreign-made goods, procurement of privately supplied professional services, purchases of food from private vendors, and gains from using connections.
       The results based on the Leningrad and Erevan subsamples of the Berkeley-Duke family budget survey suggest that in the late 1970s in Erevan, the influence of the source of income on various aspects of consumer behavior, with the exception of savings, was negligible. In Leningrad, on the other hand, this influence was quite significant. In addition, the paper provides estimates of income elasticities of demand for some categories of goods and services purchased from private vendors in the former USSR. It is found that in Leningrad an increase in incomes tended to lead to a rapid shift to the second economy sources of supply. In Erevan, on the other hand, income elasticities were consistent with the increase in consumption without changing sources of supply. In other words, the state-controlled markets and government subsidies played a significantly more important role in equalizing the distribution of real consumption in Leningrad than they did in Erevan.
JEL D12 D31 J4 P20 P24 P52

       Jim Leitzel, "Goods Diversion and Repressed Inflation: Notes on the Political Economy of Price Liberalization"
ABSTRACT: Most analyses of parallel markets in centrally-planned systems focus on queue-rationing as the mechanism whereby state-sector goods become available for second economy resale. This paper takes into account employee diversion of goods as a second channel through which merchandise can move to private markets. Diversion of goods tends to temper the adverse distributional consequences of price liberalization. As repressed inflation increases, more goods are diverted out of the state sector, and the likelihood that an individual will be made worse off by a transition to free prices is diminished.
JEL K42 P41

       William Pyle, "Private Car Ownership and Second Economy Activity"
ABSTRACT: During the early 1970s, the Soviet Union experienced a rapid growth in per capita car ownership, accompanied by the development of an active unofficial economy in used cars and auto-related goods and services. Second-hand cars were frequently bought and sold through state commission shops at unofficial market prices. And car repair services would frequently be provided by "moonlighting" mechanics, using parts stolen from state garages. This study uses the heretofore unexploited data from Berkeley-Duke emigre interview project to explore the factors shaping this part of the second economy. The estimated value of transactions in this sector exceeds previous estimates that have appeared in Soviet sources.
JEL D12 K42 P41

38. Kimberly C. Neuhauser, "Two Channels of Consumer Credit in the USSR," December 1993, 67 pp.
ABSTRACT: The opportunities for borrowing by households in the Soviet Union were limited. Credit was planned and rationed by the state and, with some exceptions, was not readily available for consumer needs. Individuals adapted to the absence of state bank credit by creating a system of informal credit mechanisms within the household sector. Under this informal system households were able to borrow and willing to lend relatively large amounts of cash. This paper discusses consumer credit in the USSR as formally provided by the state and informally within the household sector. It begins with a discussion of the various types and volumes of consumer credit provided by the Soviet state in the 1970s and 1980s. A discussion of the value of consumer credit generated in the household sector follows, based on the Berkeley-Duke Survey. The paper then explores the characteristics of informal credit mechanisms and their applicability in the Soviet command-administrative economy. It is hypothesized that in the Soviet case uncertainty about the availability of goods was in part responsible for this behavior. This paper also identifies some of the determinants of a household's participation in this informal credit market.
JEL D10 E50

BDOPs available on disk in WordPerfect:

5, 7a, 11 (Treml's paper only), 14, 15, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28 (part 1 and 2), 29 30, 31, 32, 33, 34, 35, 36, 37, 38
Sedik paper (16) is available only in MSWord

Listing revised: May, 1997