The work investigates the impact of changes in income on household welfare in Russia during 1994 to 1998. Part I introduces the main estimation techniques, presents the data, and describes the origins of arrears crisis of wages, pensions and social benefits in Russia. Part II contains the empirical analysis. Chapter 5 simulates the effect of government cash transfers on poverty with Instrumental Variables estimation, taking into account consumption smoothing of households. Chapter 6 explores the welfare effects of non-payments of pensions in 1996 using a Difference-In-Differences model....