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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. Chapter 7 analyses the impact of wage arrears on the elderly who were either working themselves or living together with workers using matching techniques. Chapter 8 studies the link between wage arrears and child health, also using matching techniques. The final chapter summarizes the main findings and draws policy conclusions.