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Wage Arrears and the Distribution of Earnings in Russia

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  • Lehmann, Hartmut

    ()
    (University of Bologna)

  • Wadsworth, Jonathan

    ()
    (Royal Holloway, University of London)

Abstract

The increase in wage inequality in Russia during its transition process has far exceeded the increase in wage dispersion observed in other European countries undergoing transition. Russia also has an extremely large incidence of wage arrears. We analyse to what extent wage arrears affect the wage distribution and measures of wage inequality in Russia. We present counterfactual distributions, derived from a variety of different methods, which suggest that conventional measures of earnings dispersion would be some 20 to 30 per cent lower in the absence of arrears. We then go on to show how wage gaps at various points in the pay distribution across gender, education, region and industry are influenced by a failure to allow for wage arrears. Using our counterfactual estimates we show, for example, that the median gender wage gap would be around twenty-five points higher than the actual gap that we observe. Similarly, the counterfactual ratio of mean graduate pay to mean pay of those with primary education is around twenty points lower than observed. We show that the parameters of the counterfactual wage distributions are very similar to the parameters of the observed wage distributions of those not in arrears. This means that for those wishing to study aspects of wage differentials and inequality in Russia, it may be feasible to use the subset of those not in arrears and still get close to the true population parameters.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 410.

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Length: 44 pages
Date of creation: Dec 2001
Date of revision:
Publication status: published in: Research in Labor Economics, 2007, 26, 125-155
Handle: RePEc:iza:izadps:dp410

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Keywords: Wage arrears; earnings inequality; transition economies; counterfactuals;

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References

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  1. Lehmann, Hartmut & Wadsworth, Jonathan & Acquisti,Alessandro, 1998. "Grime And Punishment: Job Insecurity And Wage Arrears in The Russian Federation," Economics Technical Papers 986, Trinity College Dublin, Department of Economics.
  2. Francine D. Blau & Lawrence M. Kahn, 1994. "International Differences in Male Wage Inequality: Institutions versus Market Forces," NBER Working Papers 4678, National Bureau of Economic Research, Inc.
  3. Petra E. Todd & Jeffrey A. Smith, 2001. "Reconciling Conflicting Evidence on the Performance of Propensity-Score Matching Methods," American Economic Review, American Economic Association, vol. 91(2), pages 112-118, May.
  4. 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).
  5. Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 410-42, June.
  6. Constantin G. Ogloblin, 1999. "The Gender earnings differential in the Russian transition economy," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 52(4), pages 602-627, July.
  7. Oaxaca, Ronald, 1973. "Male-Female Wage Differentials in Urban Labor Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(3), pages 693-709, October.
  8. Brainerd, Elizabeth, 1998. "Winners and Losers in Russia's Economic Transition," American Economic Review, American Economic Association, vol. 88(5), pages 1094-1116, December.
  9. Earle, John S. & Peter, Klara Sabirianova, 2000. "Equilibrium Wage Arrears: A Theoretical and Empirical Analysis of Institutional Lock-In," IZA Discussion Papers 196, Institute for the Study of Labor (IZA).
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Citations

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Cited by:
  1. Anna LUKIYANOVA, 2008. "Structure and Distribution of Earnings in Russia, 1994–2003," The Journal of Comparative Economic Studies (JCES), The Japanese Society for Comparative Economic Studies (JSCES), vol. 4, pages 9-40, December.
  2. Yuriy Gorodnichenko & Klara Sabirianova Peter & Dmitriy Stolyarov, 2009. "Inequality and Volatility Moderation in Russia: Evidence from Micro-Level Panel Data on Consumption and Income," NBER Working Papers 15080, National Bureau of Economic Research, Inc.
  3. Stanislav Kolenikov & Anthony Shorrocks, 2005. "A Decomposition Analysis of Regional Poverty in Russia," Review of Development Economics, Wiley Blackwell, vol. 9(1), pages 25-46, 02.
  4. Dorota Witkowska, 2013. "Gender Disparities in the Labor Market in the EU," International Advances in Economic Research, Springer, vol. 19(4), pages 331-354, November.
  5. Lilia Maliar & Serguei Maliar, 2003. "A Neoclassical Theory Of Wage Arrears In Transition Economies," Working Papers. Serie AD 2003-15, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  6. Boyarchuk, Dmytro & Maliar, Lilia & Maliar, Serguei, 2005. "The consumption and welfare implications of wage arrears in transition economies," Journal of Comparative Economics, Elsevier, vol. 33(3), pages 540-564, September.
  7. Geishecker, Ingo & Haisken-DeNew, John P., 2004. "Landing on all fours? Communist elites in post-Soviet Russia," Journal of Comparative Economics, Elsevier, vol. 32(4), pages 700-719, December.
  8. David Black & Yi-Ping Tseng & Roger Wilkins, 2009. "Examining the Role of Demographic Change in the Decline in Male Employment in Australia: A Propensity Score Re-weighting Decomposition Approach," Melbourne Institute Working Paper Series wp2009n24, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  9. Heshmati, Almas, 2004. "Regional Income Inequality in Selected Large Countries," IZA Discussion Papers 1307, Institute for the Study of Labor (IZA).
  10. Lukiyanova, A., 2011. "Wage Inequality in Russian Economic Transition (1991–2008): Stylized Facts and Explanations," Journal of the New Economic Association, New Economic Association, issue 12, pages 124-147.
  11. Asad Alam & Mamta Murthi & Ruslan Yemtsov & Edmundo Murrugarra & Nora Dudwick & Ellen Hamilton & Erwin Tiongson, 2005. "Growth, Poverty and Inequality : Eastern Europe and the Former Soviet Union," World Bank Publications, The World Bank, number 7287.
  12. Mitra, Pradeep & Yemtsov, Ruslan, 2006. "Increasing inequality in transition economies : is there more to come?," Policy Research Working Paper Series 4007, The World Bank.

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