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Wage Determination and Wage Inequality Inside a Russian Firm in Late Transition: Evidence from Personnel Data – 1997 to 2002

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Author Info
Thomas Dohmen
Hartmut Lehmann
Mark E. Schaffer

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Abstract

We use personnel data from a Russian firm for the years 1997 to 2002 to study thedeterminants of wages during transition. Our findings indicate that remuneration isnot predetermined by formal rules and a stable institutionalized structure of wages,but rather that local labor market conditions have a strong impact on wage setting atthe firm level. In particular, we document that real wages fall substantially during aperiod of high inflation and worsening local labor market conditions. Relative wagedecreases are most pronounced for employees who initially earned the highest rents.The process of rent extraction leads to a strong compression of real wages and realcompensation at the firm.

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File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.81765.de/diw_escirru0001.pdf
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Paper provided by DIW Berlin, German Institute for Economic Research in its series ESCIRRU Working Papers with number 1.

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Length: 42 p.
Date of creation: 2007
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Handle: RePEc:diw:diwesc:diwesc1

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  1. Brainerd, Elizabeth, 2002. "Five Years after: The Impact of Mass Privatization on Wages in Russia, 1993-1998," Journal of Comparative Economics, Elsevier, vol. 30(1), pages 160-190, March. [Downloadable!] (restricted)
  2. Lerman, Robert I & Yitzhaki, Shlomo, 1985. "Income Inequality Effects by Income," The Review of Economics and Statistics, MIT Press, vol. 67(1), pages 151-56, February. [Downloadable!] (restricted)
  3. Lehmann, Hartmut & Wadsworth, Jonathan & Acquisti, Alessandro, 1999. "Grime and Punishment: Job Insecurity and Wage Arrears in the Russian Federation," Journal of Comparative Economics, Elsevier, vol. 27(4), pages 595-617, December. [Downloadable!] (restricted)
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  4. Peter J. Luke & Mark E. Schaffer, 2000. "Wage Determination in Russia: An Econometric Investigation," William Davidson Institute Working Papers Series 295, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
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  5. Simon Clarke, 2002. "Market and institutional determinants of wage differentiation in Russia," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 55(4), pages 628-648, July.
  6. Tito Boeri & Katherine Terrell, 2002. "Institutional Determinants of Labor Reallocation in Transition," Journal of Economic Perspectives, American Economic Association, vol. 16(1), pages 51-76, Winter. [Downloadable!] (restricted)
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  7. Alejandro Lopez-Feldman, 2005. "DESCOGINI: Stata module to perform Gini decomposition by income source," Statistical Software Components S456001, Boston College Department of Economics, revised 22 Sep 2008. [Downloadable!]
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