Paid Services to Population of the Russian Regions

The objective of this research is to test the null hypothesis that there is no long-term, equilibrium relationship between the volume of paid services to regional population on the one hand and personal income and government financial assistance to regional users on the other hand. Additionally, we assessed the short-term impact of 15 factors, including the above mentioned, on the volume of paid services. To achieve these objectives, a panel for 82 regions of the Russian Federation for 2000-2022 was compiled from official regional statistics. Using the pooled mean group estimator and the error correction model, we found out that personal income and government financial assistance are cointegration partners of the volume of paid services: their relationship is indeed long-term. The volume of paid services was positively elastic with respect to its cointegration partners. Every additional ruble of personal income or government financial assistance does not simply replace the ruble paid by the user; it frees it for new purchases. Regression analysis of the impact of 15 factors on the volume of paid services (all in log form) was carried out assuming the existence of not only long-term but short-term relationships as well. Stepwise (forward) regression with very strict parameters produced seven factors with major economic loadings. In particular, it demonstrated a positive relation between the volume of paid services on the one hand and per head consumer expenditures and age structure of regional population on the other hand. Also, the volume was negatively related to regional inflation and proved to be inelastic with respect to all these factors