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Wage Determination in Russia: An Econometric Investigation

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Author Info

  • Luke, Peter L.

    (CERT (Centre for Economic Reform and Transformation))

  • Schaffer, Mark

    () (Heriot-Watt University, Edinburgh)

Abstract

Using a firm level dataset from four regions of Russia covering 1996/97, an investigation was carried out into how the surplus created within the firm is divided between profits and wages. An efficient bargaining framework based on the work of Svejnar (1986) is employed which takes into account the alternative wage or outside option available to employees in the firm as well as the value added per employee. Statistical differences in the share of the surplus taken by employees employed in state, private and mixed forms of firms are found. In addition, the results prove sensitive to the presence of outliers and influential observations. A variety of diagnostic methods are employed to identify these influential observations and robust methods are employed to lessen the influence of them. Whereas in practice some of the diagnostic and robust methods utilised proved incapable of identifying or accommodating the gross outlier(s) in the data, the more successful methods included robust regression, Winsorising, the Hadi and Siminoff algorithm, Cook’s Distance and Covratio.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 143.

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Length: 42 pages
Date of creation: Apr 2000
Date of revision:
Handle: RePEc:iza:izadps:dp143

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Keywords: Russian labour markets; efficient bargaining; outliers; regression diagnostics; robust regression;

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  1. Orley Ashenfelter & James N. Brown, 1985. "Testing the Efficiency of Employment Contracts," Working Papers 573, Princeton University, Department of Economics, Industrial Relations Section..
  2. 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.
  3. Svejnar, J., 1984. "Bargaining power, fear of disagreement and wage settlements: theory and evidence from U.S. industry," CORE Discussion Papers 1984037, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  4. MaCurdy, Thomas E & Pencavel, John H, 1986. "Testing between Competing Models of Wage and Employment Determination in Unionized Markets," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages S3-S39, June.
  5. Lockwood, Ben & Manning, Alan, 1989. "Dynamic Wage-Employment Bargaining with Employment Adjustment Costs," Economic Journal, Royal Economic Society, vol. 99(398), pages 1143-58, December.
  6. Reiss, Peter C., 1990. "Detecting multiple outliers with an application to R&D productivity," Journal of Econometrics, Elsevier, vol. 43(3), pages 293-315, March.
  7. Layard, R. & Nickell, S., 1988. "Is Unemployment Lower If Unions Bargain Over Employment?," Papers 308, London School of Economics - Centre for Labour Economics.
  8. Currie, Janet, 1991. "Employment Determination in a Unionized Public-Sector Labor Market: The Case of Ontario's School Teachers," Journal of Labor Economics, University of Chicago Press, vol. 9(1), pages 45-66, January.
  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. McDonald, Ian M & Solow, Robert M, 1981. "Wage Bargaining and Employment," American Economic Review, American Economic Association, vol. 71(5), pages 896-908, December.
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Cited by:
  1. Natália P. Monteiro & Miguel Portela & Odd Rune Straume, 2010. "Firm ownership and rent sharing," NIPE Working Papers 13/2010, NIPE - Universidade do Minho.
  2. Konings, Jozef & Lehmann, Hartmut, 2002. "Marshall and Labor Demand in Russia: Going Back to Basics," Journal of Comparative Economics, Elsevier, vol. 30(1), pages 134-159, March.
  3. T. Dohmen & H. Lehmann & M. E. Schaffer, 2007. "Wage determination and wage inequality inside a Russian firm in late transition: Evidence from personnel data - 1997 to 2002," Working Papers 606, Dipartimento Scienze Economiche, Universita' di Bologna.
  4. Gimpelson, V. & Kapeliushnikov, R. & Lukyanova, A. & Ryzhikova, Z. & Kulyaeva, G., 2010. "Ownership and Wage Differentiation in Russia," Journal of the New Economic Association, New Economic Association, issue 5, pages 48-72.
  5. Ogloblin, Constantin & Brock, Gregory, 2005. "Wage determination in urban Russia: Underpayment and the gender differential," Economic Systems, Elsevier, vol. 29(3), pages 325-343, September.
  6. Jan J. Rutkowski & Stefano Scarpetta, 2005. "Enhancing Job Opportunities : Eastern Europe and the Former Soviet Union," World Bank Publications, The World Bank, number 7408.
  7. Elizabeth Brainerd, 2000. "How Does Privatization Affect Workers? The Case of the Russian Mass Privatization Program," William Davidson Institute Working Papers Series 303, William Davidson Institute at the University of Michigan.
  8. S. Dobbelaere, 2003. "Ownership, Firm Size and Rent Sharing in a Transition Country," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 03/170, Ghent University, Faculty of Economics and Business Administration.
  9. Dobbelaere, Sabien, 2004. "Ownership, firm size and rent sharing in Bulgaria," Labour Economics, Elsevier, vol. 11(2), pages 165-189, April.
  10. Maxim Bouev, 2005. "State Regulations, Job Search and Wage Bargaining: A Study in the Economics of the Informal Sector," William Davidson Institute Working Papers Series wp764, William Davidson Institute at the University of Michigan.

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