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Estimating the role of labor resources reallocation between sectors on the growth of aggregate labor productivity in the Russian economy

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  • Ivan V. Savin

    (Ural Federal University, Ekaterinburg, Russia)

Abstract

Relevance. Economic growth can be achieved in two different ways: through technological improvements and reallocation of market shares from less to more productive units. Despite the significant research literature on innovation in Russia, the literature on market selection, especially at the sectoral level, is relatively scarce. This is the research gap that this study aims to address. Research objective. The article assesses how labor resource reallocation between sectors has influenced the dynamics of aggregate labor productivity in the Russian economy over the past two decades. Data and Methods. For this purpose, the growth of aggregate labor productivity was decomposed into the growth of productivity within the sectors themselves and the reallocation of labor resources between them. This allowed us to conduct a quantitative estimation of the role of market selection at the sectoral level. For our study, we used data from Rosstat (from 2002 to 2018) and the World Input-Output Database (from 2000 to 2014). Results. For Rosstat data, the ratio of the effect of changes in labor productivity and labor resource reallocation by sector on total labor productivity over the period was 0.71/0.29, and for WIOD data it was 0.44/0.56. This indicates that labor resources are more likely to be reallocated to related sectors (e.g. between manufacturing industries). Conclusions. The results suggest that there is competitive market selection at the sectoral level and that labor has generally been reallocated to more productive sectors of the economy, contributing significantly to the growth of aggregate productivity in the economy. Our study shows the sectors of the economy where this reallocation has taken place, which may help to determine where this process is successful and where it needs additional stimulation.

Suggested Citation

  • Ivan V. Savin, 2022. "Estimating the role of labor resources reallocation between sectors on the growth of aggregate labor productivity in the Russian economy," R-Economy, Ural Federal University, Graduate School of Economics and Management, vol. 8(1), pages 57-67.
    • Handle: RePEc:aiy:journl:v:8:y:2022:i:1:p:57-67
    DOI: https://doi.org/10.15826/recon.2022.8.1.005
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    References listed on IDEAS

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    1. Valeriy V. Mironov & Liudmila D. Konovalova, 2019. "Structural changes and economic growth in the world economy and Russia," Russian Journal of Economics, ARPHA Platform, vol. 5(1), pages 1-26, April.
    2. Y. Ma, 2015. "Simpson’s paradox in GDP and per capita GDP growths," Empirical Economics, Springer, vol. 49(4), pages 1301-1315, December.
    3. McMillan, Margaret & Rodrik, Dani & Verduzco-Gallo, Íñigo, 2014. "Globalization, Structural Change, and Productivity Growth, with an Update on Africa," World Development, Elsevier, vol. 63(C), pages 11-32.
    4. Eric Bartelsman & John Haltiwanger & Stefano Scarpetta, 2013. "Cross-Country Differences in Productivity: The Role of Allocation and Selection," American Economic Review, American Economic Association, vol. 103(1), pages 305-334, February.
    5. Gaaitzen de Vries & Marcel Timmer & Klaas de Vries, 2015. "Structural Transformation in Africa: Static Gains, Dynamic Losses," Journal of Development Studies, Taylor & Francis Journals, vol. 51(6), pages 674-688, June.
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    More about this item

    Keywords

    competition; competitive selection; labor productivity; productivity growth; resource allocation; structural change; decomposition; value added;
    All these keywords.

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General

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