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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 the determinants of wages during transition. Our findings indicate that remuneration is not 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 at the firm level. In particular, we document that real wages fall substantially during a period of high inflation and worsening local labor market conditions. Relative wage decreases 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 real compensation at the firm.

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File URL: http://www.sml.hw.ac.uk/cert/wpa/2007/dp0704.pdf
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Publisher Info
Paper provided by Centre for Economic Reform and Transformation, Heriot Watt University in its series CERT Discussion Papers with number 0704.

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Date of creation: 2007
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Handle: RePEc:hwe:certdp:0704

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Postal: Edinburgh EH14 4AS
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Web page: http://www.som.hw.ac.uk/cert/
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Related research
Keywords: personnel economics; wage determination; Russia; transition;

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Find related papers by JEL classification:
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
P31 - Economic Systems - - Socialist Institutions and Their Transitions - - - Socialist Enterprises and Their Transitions

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  1. 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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  2. 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!]
  3. 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)
  4. 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)
  5. 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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  6. 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.
  7. 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)
    Other versions:
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