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Dynamism and Inertia on the Russian Labour Market: A Model of Segmentation

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  • Irena Grosfeld
  • Claudia Senik-Leygonie
  • Thierry Verdier
  • Stanislav Kolenikov
  • Elena Paltseva

Abstract

This paper proposes an explanation of the puzzling coexistence of elements of inertia and dynamism on the Russian labour market using a segmentation model. Risk averse workers are differentiated according to their productivity. They face a trade-off between wages and access to social services provided by the firm. The most productive workers leave their initial firm, contract on the spot labour market, and concentrate in the best performing firms. The model provides a possible interpretation of wage arrears which can be viewed as an element of an implicit contract between firms and less productive workers. We test some of the predictions of the model using a panel dataset containing 13,410 firms, for 1993 - 1997.

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Bibliographic Info

Paper provided by William Davidson Institute at the University of Michigan in its series William Davidson Institute Working Papers Series with number 246.

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Length: pages
Date of creation: 01 Apr 1999
Date of revision:
Handle: RePEc:wdi:papers:1999-246

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Keywords: transition; labour market; wage arrears; Russia;

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References

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  1. Guillermo Calvo & Fabrizio Coricelli, 1992. "Output Collapse in Eastern Europe," IMF Working Papers 92/64, International Monetary Fund.
  2. Blanchard, Olivier & Kremer, Michael, 1997. "Disorganization," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 112(4), pages 1091-1126, November.
  3. Guido Friebel, 2000. "Why Russian Workers do not Move: Attachment of Workers through In-Kind Payments," Econometric Society World Congress 2000 Contributed Papers, Econometric Society 1376, Econometric Society.
  4. Clifford Gaddy & Barry W. Ickes, 1998. "To Restructure or Not to Restructure: Informal Activities and Enterprise Behavior in Transition," William Davidson Institute Working Papers Series, William Davidson Institute at the University of Michigan 134, William Davidson Institute at the University of Michigan.
  5. G. Alfandari & M.E. Schaffer, 1996. ""Arrears" in the Russian Enterprise Sector," CERT Discussion Papers, Centre for Economic Reform and Transformation, Heriot Watt University 9608, Centre for Economic Reform and Transformation, Heriot Watt University.
  6. Gerard Roland & Thierry Verdier, 1997. "Transition and the Output Fall," William Davidson Institute Working Papers Series, William Davidson Institute at the University of Michigan 37, William Davidson Institute at the University of Michigan.
  7. Pietro Garibaldi & Zuzana Brixiova, 1998. "Labor Market Institutions and Unemployment Dynamics in Transition Economies," IMF Staff Papers, Palgrave Macmillan, vol. 45(2), pages 269-308, June.
  8. Guillermo A. Calvo & Fabrizio Coricelli, 1993. "Output Collapse in Eastern Europe: The Role of Credit," IMF Staff Papers, Palgrave Macmillan, vol. 40(1), pages 32-52, March.
  9. Fan Gang & Maria Rosa Lunati & David O’Connor, 1998. "Labour Market Aspects of State Enterprise Reform in China," OECD Development Centre Working Papers 141, OECD Publishing.
  10. Perotti, E. C., 1998. "Inertial credit and opportunistic arrears in transition," European Economic Review, Elsevier, Elsevier, vol. 42(9), pages 1703-1725, November.
  11. Hartmut Lehmann & Jonathon Wadsworth & Alessandro Acquisti, 1997. "Grime and Punishment: Employment, Wages and Wage Arrears in the Russian Federation," William Davidson Institute Working Papers Series, William Davidson Institute at the University of Michigan 103, William Davidson Institute at the University of Michigan.
  12. Blanchard, O. & Aghion, P., 1996. "On insider privatization," European Economic Review, Elsevier, Elsevier, vol. 40(3-5), pages 759-766, April.
  13. Harris, John R & Todaro, Michael P, 1970. "Migration, Unemployment & Development: A Two-Sector Analysis," American Economic Review, American Economic Association, American Economic Association, vol. 60(1), pages 126-42, March.
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Cited by:
  1. Haaparanta, Pertti & Juurikkala, Tuuli & Lazareva, Olga & Pirttilä, Jukka & Solanko, Laura & Zhuravskaya, Ekaterina, 2003. "Firms and public service provision in Russia," BOFIT Discussion Papers, Bank of Finland, Institute for Economies in Transition 16/2003, Bank of Finland, Institute for Economies in Transition.
  2. Guido Friebel & Sergei Guriev, 2000. "Should I Stay or Can I Go? Worker Attachment in Russia," Working Papers w0008, Center for Economic and Financial Research (CEFIR).
  3. Guido Friebel & Sergei Guriev, 1999. "Why Russian Workers Do Not Move: Attachment of Workers Through In-Kind Payments," William Davidson Institute Working Papers Series, William Davidson Institute at the University of Michigan 283, William Davidson Institute at the University of Michigan.
  4. Laura Solanko, 2002. "Fiscal competition in a transition economy," Public Economics, EconWPA 0209002, EconWPA.
  5. Smirnych, Larissa & Woergoetter, Andreas, 2000. "Einkommen, Geschlecht und Arbeitsplatzwechsel in Russland 1998. Earnings, Gender, and Mobility in the RF 1995-1998," Transition Economics Series, Institute for Advanced Studies 15, Institute for Advanced Studies.
  6. Ariane Lambert-Mogiliansky & Konstantin Sonin & Ekaterina Zhuravskaya, 2003. "Capture of Bankruptcy: Theory and Russian Evidence," Working Papers w0038, Center for Economic and Financial Research (CEFIR).

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