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The Costs of Job Loss in Russia

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Author Info

  • Lehmann, Hartmut

    ()
    (University of Bologna)

  • Muravyev, Alexander

    ()
    (St. Petersburg University GSOM and IZA)

  • Razzolini, Tiziano

    ()
    (University of Siena)

  • Zaiceva, Anzelika

    ()
    (University of Modena and Reggio Emilia)

Abstract

This paper is the first to analyze the costs of job loss in Russia, using unique new data from the Russian Longitudinal Monitoring Survey over the years 2003-2008, including a special supplement on displacement that was initiated by us. We employ fixed effects regression models and propensity score matching techniques in order to establish the causal effect of displacement for displaced individuals. The paper is innovative insofar as we investigate as relevant outcomes fringe and in-kind benefits and the propensity to have an informal employment relationship in addition to monthly earnings, hourly wages, employment and hours worked, which are traditionally analyzed. We find that, compared to the control group of non-displaced workers (i.e. stayers and quitters), displaced individuals face a significant income loss following displacement, which is mainly due to the reduction in employment and hours worked. This effect is robust to the definition of displacement. The losses seem to be more pronounced and are especially large for older workers with labor market experience and human capital acquired in Soviet times and for workers with low education. Workers displaced from state firms experience particularly large relative losses in the short run, while such losses for workers laid off from private firms are more persistent. Turning to the additional labor market outcomes, there is a loss in terms of the number of fringe and in-kind benefits for reemployed individuals but not in terms of their value. There is also some evidence of an increased probability of working in informal jobs if displaced. These results point towards the importance of both firm-specific human capital and of obsolete skills obtained under the centrally planned economy as well as to a wider occurrence of job insecurity among displaced workers.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5415.

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Length: 55 pages
Date of creation: Dec 2010
Date of revision:
Handle: RePEc:iza:izadps:dp5415

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Related research

Keywords: Russia; worker displacement; costs of job loss; propensity score matching;

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References

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  1. Eichhorst, Werner & Feil, Michael & Braun, Christoph, 2008. "What Have We Learned? Assessing Labor Market Institutions and Indicators," IZA Discussion Papers 3470, Institute for the Study of Labor (IZA).
  2. T. Dolgopiatova, 2007. "Ownership Concentration and Russian Company Development: Empirical Evidence," Problems of Economic Transition, M.E. Sharpe, Inc., vol. 50(5), pages 7-23, September.
  3. Andrea Ichino & Guido Schwerdt & Rudolf Winter-Ebmer & Josef Zweimüller, 2007. "Too Old to Work, too Young to Retire?," CESifo Working Paper Series 2118, CESifo Group Munich.
  4. V. Gimpelson & R. Kapeliushnikov & A. Lukiyanova, 2009. "Employment Protection Legislation in Russia: Regional Enforcement and Labour Market Outcomes," ESCIRRU Working Papers 11, DIW Berlin, German Institute for Economic Research.
  5. H. Lehmann & N. Pignatti & J. Wadsworth, 2005. "The Incidence and Cost of Job Loss in the Ukrainian Labor Market," Working Papers 545, Dipartimento Scienze Economiche, Universita' di Bologna.
  6. Guido Schwerdt & Andrea Ichino & Oliver Ruf & Rudolf Winter-Ebmer & Josef Zweimüller, 2008. "Does the color of the collar matter? Firm specific human capital and post-displacement outcomes," NRN working papers 2008-01, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria.
  7. Orazem, Peter F. & Vodopivec, Milan & Wu, Ruth, 2004. "Worker Displacement during the Transition: Experience from Slovenia," IZA Discussion Papers 1297, Institute for the Study of Labor (IZA).
  8. Muravyev, Alexander, 2010. "Evolution of Employment Protection Legislation in the USSR, CIS and Baltic States, 1985-2009," IZA Discussion Papers 5365, Institute for the Study of Labor (IZA).
  9. H. Lehmann & A. Muravyev, 2010. "Labor market institutions and labor market performance: what can we learn from transition countries?," Working Papers 714, Dipartimento Scienze Economiche, Universita' di Bologna.
  10. Simeon Djankov & Peter Murrell, 2002. "Enterprise Restructuring in Transition: A Quantitative Survey," Journal of Economic Literature, American Economic Association, vol. 40(3), pages 739-792, September.
  11. Hartmut Lehmann & Kaia Phillips & Jonathan Wadsworth, 2002. "The Incidence and Cost of Job Loss in a Transition Economy: Displaced Workers in Estonia, 1989-1999," CERT Discussion Papers 0209, Centre for Economic Reform and Transformation, Heriot Watt University.
  12. Alexander Hijzen & Richard Upward & Peter W. Wright, 2010. "The Income Losses of Displaced Workers," Journal of Human Resources, University of Wisconsin Press, vol. 45(1).
  13. I Grosfeld & P Hare, 1991. "Privatization in Hungary," CEP Discussion Papers dp0031, Centre for Economic Performance, LSE.
  14. Kenneth A. Couch & Dana W. Placzek, 2010. "Earnings Losses of Displaced Workers Revisited," American Economic Review, American Economic Association, vol. 100(1), pages 572-89, March.
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