A new institutional approach to entrepreneurship and inequality in rural Russian villages: Survey findings from 1991 to 2006

New Institutional Economics (NIE) and New Institutional Sociology (NIS) provide complementary paradigms with which to understand the relationship between formal institutional changes in a reform period and informal institutional structures with which household economies adapt to reform policies. Survey data gathered from rural Russian households from 1991 to 2006 provide an empirical test of hypotheses drawn from NIE and NIS. The most important finding is that in the absence of secure formal property rights informal institutional elements played the dominant role in entrepreneurship and inequality between households in the Russian countryside, but that as formal institutions became legitimized, and the overall economy stabilized, households that made use of these new institutional arrangements had significant advantages vis-à-vis other households. At the same time, regions which have provided opportunities for households to develop a “mixed economy” that combines household enterprise production, which relies to a significant degree on informal institutional elements, and wages and salaries (i.e., working for others), which is based on the legitimization of formal institutional arrangements, have produced substantially higher mean household incomes than have other regions.