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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Length: pages Date of creation: 01 Apr 1999 Date of revision: Handle: RePEc:wdi:papers:1999-246
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Find related papers by JEL classification: C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information J00 - Labor and Demographic Economics - - General - - - General L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior P52 - Economic Systems - - Comparative Economic Systems - - - Comparative Studies of Particular Economies
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Gérard Roland & Thierry Verdier, 1999.
"Transition and the output fall,"
The Economics of Transition,
The European Bank for Reconstruction and Development, vol. 7(1), pages 1-28, March.
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Haaparanta, Pertti & Juurikkala, Tuuli & Lazareva, Olga & Pirttilä, Jukka & Solanko, Laura & Zhuravskaya, Ekaterina, 2003.
"Firms and public service provision in Russia,"
BOFIT Discussion Papers
16/2003, Bank of Finland, Institute for Economies in Transition.
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Pertti Haaparanta & Tuuli Juurikkala & Olga Lazareva & Jukka Pirttila & Laura Solanko & Ekaterina Zhuravskaya, 2003.
"Firms And Public Service Provision In Russia,"
Working Papers
w0041, Center for Economic and Financial Research (CEFIR).
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