The coincidence of high unemployment and poverty in Other Urban areas reflects the effect of closures and retrenchment of many of the state enterprises that were located there under socialism and became uncompetitive after liberalization—as in the extreme case of one-company towns. In many of the countries new alternative production has not emerged sufficient to absorb the laid off workers with adequate purchasing power and access to essential services. Even some highly educated individuals such as doctors and teachers in the public sector are resorting to supplementing their incomes with other services or subsistence agriculture as salary payments are delayed. Across the ECA region rates of labor force participation are declining, which may in part reflect some normal adjustment to individual preferences after the socialist regime but also may indicate discouragement.

# **Box 4.1:  Differentiation of welfare within the region of Tomsk (Russia)**

A case study of Tomsk, an oblast or administrative district in Western Siberia spanning the capital of Tomsk (population 484 thousand) and a range of other urban and rural settlements, illustrates the diversity of welfare across them. The study authors note that secondary urban areas can vary greatly depending on factors such as whether the cities or towns achieve alternative sources of employment when they lose a dominant industry, whether they are remote or have good transport access to other centers, the level of development and wealth in their surrounding subregion, opportunities for local migration or commuting, and access to subsidiary land cultivation to supplement urban incomes.

The growth of many of the urban centers in Tomsk oblast was promoted by government incentives, both monetary and nonmonetary, which were possible because of Soviet central planning. As is true elsewhere in Russia, a large number of these monoindustrial towns are not viable under market economic conditions. These towns and cities are increasingly distinguished from viable urban areas, which in Tomsk refers to those based on extraction of natural resources (i.e., oil towns) and the regional capital, which is economically more diversified. Residents of the non-oil-producing secondary towns are most vulnerable to economic dislocations because they not only lack the services and fiscal resources of larger cities and oil towns, but also have less access to subsistence agriculture than do their rural counterparts. As a result, the highest poverty rates and greatest poverty severity are found in the secondary, non-oil towns, where residents are substantially worse off than even rural dwellers. Location-related factors such as living in the capital city or the oil towns improves welfare outcomes, but these improvements are less significant than the welfare losses associated with living in secondary non-oil towns. At the same time, non-locational factors such as education and female gender of the household head appear more beneficial in the non-oil towns because there is still some diversity of opportunity available.

The Tomsk case illustrates the importance of differentiating among settlements to assess poverty conditions. However, the favorable conditions of oil towns, which depend on commodities where market prices fluctuate, could change in response to world supply and demand.

Source: Alexandrova, A., Hamilton, E., and Kuznetsova, P. (Forthcoming 2003). _Urban Pooverty in Tomsk Oblast._ Washington D.C.: World Bank.

# **4.1.4. Other sources of income and transfers**

As noted above, with the loss of previous sources of wage and salary employment since the transition, households in the ECA region have increasingly resorted to other sources of income including self production of food where the household has access to land, although sale of agriculture produce is generally not a major source of income for urban households.<sup>25</sup> Sale of real estate where possible (including privatization vouchers), and resorting to illegal or semi-legitimate activities such as prostitution are reported in many of the poverty assessments to be coping strategies of the poor especially in urban areas, as in the Ukraine and Moldova. Receipt of transfers, both official (e.g., pensions) and private funds, is also very important to the welfare of the poor and near-poor.

> 25 Ibid. and World Bank Poverty Assessments.

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