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Wage Dispersion in Russia

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  • L.A. Grogan

    (University of Amsterdam)

Abstract

This paper examines the extent to which human capital theory can explain observed wage differentialsin the Russian Federation. Wage and income dispersion have increased markedly in Russia in the sixyears since the transition began. Some studies conclude that this is an indicator that Russian labourmarkets are becoming more competitive. In this paper, this conclusion is scrutinised from theperspective of human capital theory. Human capital theory predicts that, in unregulated labour markets,workers' remuneration depends on their individual productivity, which is itself a function ofexperience, education and skill levels, and occupation type. According to this theory, the deregulationof Russian labour markets in the transition to a market economy should make observed wages moredependent on these factors. The extent to which human capital factors influence wages can be viewed asan indicator that labour markets are beginning to 'work'. We use cross-sectional data from theGoskomstat "Russian Longitudinal Monitoring Survey" to characterise wage dispersion in the Russianlabour market in 1994. The results suggest that human capital variables explain only a small portion ofRussian wage differentials. Much more of Russian wage dispersion can be explained by regional andgender-based wage differentials. Labour markets are effectively segregated by region. This analysisconcludes that increased Russian wage dispersion does not indicate that the Russian labour market isbecoming more competitive.Theme: Transitions in the Labour Market in Eastern Europe

Suggested Citation

  • L.A. Grogan, 1997. "Wage Dispersion in Russia," Tinbergen Institute Discussion Papers 97-075/3, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:19970075
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    References listed on IDEAS

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    1. Jacob Mincer & Solomon Polachek, 1974. "Family Investments in Human Capital: Earnings of Women," NBER Chapters, in: Marriage, Family, Human Capital, and Fertility, pages 76-110, National Bureau of Economic Research, Inc.
    2. Jacob A. Mincer, 1974. "Introduction to "Schooling, Experience, and Earnings"," NBER Chapters, in: Schooling, Experience, and Earnings, pages 1-4, National Bureau of Economic Research, Inc.
    3. Ira N Gang & Robert C Stuart, 1996. "Urban to Urban Migration: Soviet Patterns and Post-Soviet Implications," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 38(1), pages 21-36, April.
    4. Atkinson,Anthony Barnes & Micklewright,John, 1992. "Economic Transformation in Eastern Europe and the Distribution of Income," Cambridge Books, Cambridge University Press, number 9780521438827.
    5. Newell, Andrew & Reilly, Barry, 1996. "The gender wage gap in Russia: Some empirical evidence," Labour Economics, Elsevier, vol. 3(3), pages 337-356, October.
    6. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1, July.
    7. Annette N. Brown, 1997. "The Economic Determinants of the Internal Migration Flows in Russia During Transition," William Davidson Institute Working Papers Series 89, William Davidson Institute at the University of Michigan.
    8. Blau, Francine D & Kahn, Lawrence M, 1996. "International Differences in Male Wage Inequality: Institutions versus Market Forces," Journal of Political Economy, University of Chicago Press, vol. 104(4), pages 791-836, August.
    9. Jacob A. Mincer, 1974. "Schooling and Earnings," NBER Chapters, in: Schooling, Experience, and Earnings, pages 41-63, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Simon Clarke, 2002. "Market and Institutional Determinants of Wage Differentiation in Russia," ILR Review, Cornell University, ILR School, vol. 55(4), pages 628-648, July.
    2. Horie, Norio & Iwasaki, Ichiro & 岩﨑, 一郎, 2022. "Returns to Education in European Emerging Markets: A Meta-Analytic Review," RRC Working Paper Series 95, Russian Research Center, Institute of Economic Research, Hitotsubashi University.

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    More about this item

    Keywords

    Russia; human capital; wage dispersion;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe
    • P11 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Planning, Coordination, and Reform
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination

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