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Grime and Punishment: Job Insecurity and Wage Arrears in the Russian Federation

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  • A Aquisti
  • H Lehmann
  • Jonathan Wadsworth

Abstract

The initial years of transition in the Russian Federation have been characterised by relatively smaller falls in employment than in other reform-orientated countries of eastern Europe, despite the huge negative shock caused by the move from planned to market economy. Using information from two complementary household survey data sets, we show that for many Russian workers, the dominant form of labour market adjustment has instead been the delayed receipt of wages. Other forms of adjustment at the intensive margin have not been used much. Wage arrears are found across the private, state and budgetary sector in approximately equal proportions. There are large regional variations in the incidence of wage arrears. Workers in the metropolitan centre are significantly less affected by delayed and incomplete wage payments than workers in the provinces. There is less evidence that individual characteristics contribute much toward the incidence of wage arrears, though unobserved heterogeneity may have some role to play. As with the incidence of unemployment, however, there is evidence that the persistence of arrears is concentrated on a subset of the working population. We show that workers can only exercise the exit option of a job quit from a firm paying wages in arrears if the outside labour market is sufficiently dynamic.

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Bibliographic Info

Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0403.

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Date of creation: Sep 1998
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Handle: RePEc:cep:cepdps:dp0403

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Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP

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  1. A Aquisti & H Lehmann & Jonathan Wadsworth, 1998. "Grime and Punishment: Job Insecurity and Wage Arrears in the Russian Federation," CEP Discussion Papers dp0403, Centre for Economic Performance, LSE.
  2. Foley, M.C., 1997. "Labor Market Dynamics in Russia," Papers 780, Yale - Economic Growth Center.
  3. Hartmut Lehmann & Jonathan Wadsworth, 1999. "Tenures that Shook the World: Worker Turnover in Russia, Poland and Britain," William Davidson Institute Working Papers Series 160, William Davidson Institute at the University of Michigan.
  4. Mark C. Foley, 1997. "Labor Market Dynamics in Russia," Working Papers 780, Economic Growth Center, Yale University.
  5. Andrei Shleifer, 1996. "Government in Transition," Harvard Institute of Economic Research Working Papers 1783, Harvard - Institute of Economic Research.
  6. Foley, M.C., 1997. "Multiple Job Holding in Russia During Economic Transition," Papers 781, Yale - Economic Growth Center.
  7. Paul Gregg & Jonathan Wadsworth, 1996. "Mind the Gap," CEP Discussion Papers dp0303, Centre for Economic Performance, LSE.
  8. Richard Layard & Andrea Richter, 1995. "How much unemployment is needed for restructing: the Russian experience," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 3(1), pages 39-58, 03.
  9. Lehmann, Hartmut & Wadsworth, Jonathan & Acquisti, Alessandro, 1999. "Grime and Punishment: Insecurity and Wage Arrears in the Russian Federation," IZA Discussion Papers 65, Institute for the Study of Labor (IZA).
  10. G. Alfandari & M.E. Schaffer, 1996. ""Arrears" in the Russian Enterprise Sector," CERT Discussion Papers 9608, Centre for Economic Reform and Transformation, Heriot Watt University.
  11. A. Richter & M.E. Schaffer, 1996. "The Performance of De Novo Private Firms in Russian Manufacturing," CERT Discussion Papers 9610, Centre for Economic Reform and Transformation, Heriot Watt University.
  12. Simon Johnson & Daniel Kaufman & Andrei Shleifer, 1997. "The Unofficial Economy in Transition," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 28(2), pages 159-240.
  13. Mark C. Foley, 1997. "Multiple Job Holding in Russia During Economic Transition," Working Papers 781, Economic Growth Center, Yale University.
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