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Investment in Human Capital under Economic Transformation in Russia

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Author Info
Nesterova Daria ()
Sabirianova Klara ()

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Abstract

This paper employs the data from Russian Longitudinal Monitoring Survey (RLMS) to study human capital determinants of wage and employment changes from 1992 to 1996. We analyze how returns to schooling are changing over the transition period in Russia. The evidence shows that at the beginning of economic reforms (1992-1994) unconstrained wage setting shifted returns in favor of more educated individuals. But the consequent structural changes along with devaluation of some skills and reduction of supply of skilled jobs lead to a decline in the rates of return to schooling. The returns to experience also tend to decline substantially. Compared with workers of state-owned and privatized companies, workers of new private firms have greater returns to schooling and smaller returns to experience. We also find robust evidence of a strong impact on wages caused by firm–specific and regional characteristics. Among other results, higher education tends to reduce the probability of exit from employment and unemployment.

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Publisher Info
Paper provided by EERC Research Network, Russia and CIS in its series EERC Working Paper Series with number 99-04e.

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Length: 52 pages
Date of creation: 10 Dec 1998
Date of revision:
Handle: RePEc:eer:wpalle:99-04e

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Related research
Keywords: human capital; earnings function; returns to education; returns to experience; age-earnings-education profiles; labor market flows; unemployment; transition economy;

Find related papers by JEL classification:
J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
J60 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - General
J64 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment: Models, Duration, Incidence, and Job Search
O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
P24 - Economic Systems - - Socialist Systems and Transition Economies - - - National Income, Product, and Expenditure; Money; Inflation
P52 - Economic Systems - - Comparative Economic Systems - - - Comparative Studies of Particular Economies

This paper has been announced in the following NEP Reports:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Graeser, Paul, 1988. "Human Capital in a Centrally Planned Economy: Evidence," Kyklos, Blackwell Publishing, vol. 41(1), pages 75-98.
  2. Psacharopoulos, George & Layard, Richard, 1979. "Human Capital and Earnings: British Evidence and a Critique," Review of Economic Studies, Blackwell Publishing, vol. 46(3), pages 485-503, July. [Downloadable!] (restricted)
  3. Ashenfelter, Orley & Ham, John, 1979. "Education, Unemployment, and Earnings," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages S99-116, October. [Downloadable!] (restricted)
    Other versions:
  4. Robert J. Flanagan, 1995. "Wage Structure in the Transition of the Czech Economy," IMF Working Papers 95/36, International Monetary Fund.
  5. Jacob Mincer, 1958. "Investment in Human Capital and Personal Income Distribution," Journal of Political Economy, University of Chicago Press, vol. 66, pages 281. [Downloadable!] (restricted)
  6. Heckman, James J, 1979. "Sample Selection Bias as a Specification Error," Econometrica, Econometric Society, vol. 47(1), pages 153-61, January. [Downloadable!] (restricted)
  7. Freeman, Richard B., 1987. "Demand for education," Handbook of Labor Economics, in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 1, chapter 6, pages 357-386 Elsevier. [Downloadable!] (restricted)
  8. Heckman, James J, 1976. "A Life-Cycle Model of Earnings, Learning, and Consumption," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages S11-44, August. [Downloadable!] (restricted)
  9. Willis, Robert J., 1987. "Wage determinants: A survey and reinterpretation of human capital earnings functions," Handbook of Labor Economics, in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 1, chapter 10, pages 525-602 Elsevier. [Downloadable!] (restricted)
  10. Garen, John, 1984. "The Returns to Schooling: A Selectivity Bias Approach with a Continuous Choice Variable," Econometrica, Econometric Society, vol. 52(5), pages 1199-1218, September. [Downloadable!] (restricted)
  11. van Ours, J. C. & Ridder, G., 1995. "Job matching and job competition: Are lower educated workers at the back of job queues?," European Economic Review, Elsevier, vol. 39(9), pages 1717-1731, December. [Downloadable!] (restricted)
  12. Berger, Mark C, 1985. "The Effect of Cohort Size on Earnings Growth: A Reexamination of the Evidence," Journal of Political Economy, University of Chicago Press, vol. 93(3), pages 561-73, June. [Downloadable!] (restricted)
  13. Mroz, Thomas A & Popkin, Barry M, 1995. "Poverty and the Economic Transition in the Russian Federation," Economic Development and Cultural Change, University of Chicago Press, vol. 44(1), pages 1-31, October.
  14. Linz, S.J., 1993. "Gender Differences in the Russian Labour Market," Papers 9208, Michigan State - Econometrics and Economic Theory.
  15. Murphy, Kevin M & Welch, Finis, 1990. "Empirical Age-Earnings Profiles," Journal of Labor Economics, University of Chicago Press, vol. 8(2), pages 202-29, April. [Downloadable!] (restricted)
  16. Orazem, Peter F & Vodopivec, Milan, 1995. "Winners and Losers in Transition: Returns to Education, Experience, and Gender in Slovenia," World Bank Economic Review, Oxford University Press, vol. 9(2), pages 201-30, May.
    Other versions:
  17. Newell, Andrew & Reilly, Barry, 1996. "The gender wage gap in Russia: Some empirical evidence," Labour Economics, Elsevier, vol. 3(3), pages 337-356, October. [Downloadable!] (restricted)
  18. Nickell, Stephen, 1979. "Education and Lifetime Patterns of Unemployment," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages S117-31, October. [Downloadable!] (restricted)
  19. Altonji, Joseph G, 1993. "The Demand for and Return to Education When Education Outcomes Are Uncertain," Journal of Labor Economics, University of Chicago Press, vol. 11(1), pages 48-83, January. [Downloadable!] (restricted)
    Other versions:
  20. Gregory, Paul R & Collier, Irwin L, Jr, 1988. "Unemployment in the Soviet Union: Evidence from the Soviet Interview Project," American Economic Review, American Economic Association, vol. 78(4), pages 613-32, September. [Downloadable!] (restricted)
  21. Gregory, Paul R & Kohlhase, Janet E, 1988. "The Earnings of Soviet Workers: Evidence from the Soviet Interview Project," The Review of Economics and Statistics, MIT Press, vol. 70(1), pages 23-35, February. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Andrew Clark, 2000. "The Returns and Implications of Human Capital Investment in a Transition Economy: An Empirical Analysis for Russia 1994-1998," CERT Discussion Papers 0002, Centre for Economic Reform and Transformation, Heriot Watt University. [Downloadable!]
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This page was last updated on 2009-11-19.

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