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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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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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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. H Lehmann & J Wadsworth & A Aquisti, 1998. "Grime and Punishment: Job Insecurity and Wage Arrears in the Russian Federation," CEP Discussion Papers 0403, Centre for Economic Performance, LSE. [Downloadable!]
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  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. Salop, Steven C, 1979. "A Model of the Natural Rate of Unemployment," American Economic Review, American Economic Association, vol. 69(1), pages 117-25, March. [Downloadable!] (restricted)
  4. 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.
  5. 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). [Downloadable!]
  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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