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Why Russian Workers Do Not Move: Attachment of Workers Through In-Kind Payments

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Guido Friebel
Sergei Guriev

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Abstract

We relate the phenomena of sluggish interregional labour reallocation, in-kind compensation, and wage arrears in Russia to 'attachment' strategies of firms: being paid in non-monetary forms makes it hard for workers to raise the cash needed for quitting the region. Attachment may facilitate relation-specific investments, but it may also be used to exploit workers because it eliminates workers' outside options. We show that exploitation does not only happen if regional labour markets are monoposonistic. Even if there is some competition, all firms in a region may use attachment strategies. Here, workers are locked-in and do not receive any compensation for their forgone option to move. Data of the Russian Longitudinal Monitoring Survey (RLMS) support our theory. Workers who receive in-kind payments have 19% lower probability to move than workers who do receive their wages in cash.

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Paper provided by William Davidson Institute at the University of Michigan Stephen M. Ross Business School in its series William Davidson Institute Working Papers Series with number 283.

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Date of creation: 01 Oct 1999
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Handle: RePEc:wdi:papers:1999-283

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  1. Marin, Dalia & Schnitzer, Monika, 1995. "Tying Trade Flows: A Theory of Countertrade with Evidence," American Economic Review, American Economic Association, vol. 85(5), pages 1047-64, December. [Downloadable!] (restricted)
  2. Irena Grosfeld & Claudia Senik-Leygonie & Thierry Verdier & Stanislav Kolenikov & Elena Paltseva, 1999. "Dynamism and Inertia on the Russian Labour Market: A Model of Segmentation," William Davidson Institute Working Papers Series 246, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
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  3. John S. Earle, . "Post-Privatisation Ownership Structure and Productivity in Russian Industrial Enterprises," Working Papers 1999.19, Fondazione Eni Enrico Mattei. [Downloadable!]
  4. 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 Stephen M. Ross Business School. [Downloadable!]
  5. Madrian, Brigitte C, 1994. "Employment-Based Health Insurance and Job Mobility: Is There Evidence of Job-Lock?," The Quarterly Journal of Economics, MIT Press, vol. 109(1), pages 27-54, February. [Downloadable!] (restricted)
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  6. Mortensen, Dale T, 1982. "Property Rights and Efficiency in Mating, Racing, and Related Games," American Economic Review, American Economic Association, vol. 72(5), pages 968-79, December. [Downloadable!] (restricted)
  7. Ellingsen, Tore, 1998. "Payments in Kind," Working Paper Series in Economics and Finance 244, Stockholm School of Economics, revised 10 Feb 2000. [Downloadable!]
  8. Alston, Lee J & Ferrie, Joseph P, 1993. "Paternalism in Agricultural Labor Contracts in the U.S. South: Implications for the Growth of the Welfare State," American Economic Review, American Economic Association, vol. 83(4), pages 852-76, September. [Downloadable!] (restricted)
  9. Pissarides, Christopher A, 1985. "Short-run Equilibrium Dynamics of Unemployment Vacancies, and Real Wages," American Economic Review, American Economic Association, vol. 75(4), pages 676-90, September. [Downloadable!] (restricted)
  10. Aghion, P. & Blanchard, O.J., 1993. "On the Speed of Transition in Central Europe," Working papers 93-8, Massachusetts Institute of Technology (MIT), Department of Economics.
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  11. Faggio, Giulia & Konings, Jozef, 1999. "Gross Job Flows and Firm Growth in Transition Countries: Evidence Using Firm Level Data on Five Countries," CEPR Discussion Papers 2261, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  1. Osborne, Stefan & Trueblood, Michael, 2001. "An Examination Of Economic Efficiency Of Russian Crop Output In The Reform Period," 2001 Annual meeting, August 5-8, Chicago, IL 20548, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  2. Guariglia, Alessandra & Kim, Byung-Yeon, 2001. "The Dynamics of Moonlighting: What is happening in the Russian informal economy?," BOFIT Discussion Papers 5/2001, Bank of Finland, Institute for Economies in Transition. [Downloadable!]
  3. Haney, Michael & Shkaratan, Maria, 2003. "Mine closure and its impact on the community : five years after mine closure in Romania, Russia and Ukraine," Policy Research Working Paper Series 3083, The World Bank. [Downloadable!]
  4. Pertti Haaparanta & Tuuli Juurikkala & Olga Lazareva & Ekaterina Zhuravskaya & Jukka Pirttilä & Laura Solanko, 2004. "Firms and public service provision in Russia," Macroeconomics 0401015, EconWPA. [Downloadable!]
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  5. Kaitila, Ville, 2001. "Accession Countries’ Comparative Advantage in the Internal Market: A Trade and Factor Analysis," BOFIT Discussion Papers 3/2001, Bank of Finland, Institute for Economies in Transition. [Downloadable!]
  6. Ruslan Gurtoviy & Luis G. González, 2008. "How Much to Pay in Cash? Employee Retention via Stock Options," Papers on Strategic Interaction 2004-24, Max Planck Institute of Economics, Strategic Interaction Group. [Downloadable!]
  7. Solanko, Laura, 2001. "Fiscal competition in a transition economy," BOFIT Discussion Papers 4/2001, Bank of Finland, Institute for Economies in Transition. [Downloadable!]
  8. Swinnen, Johan F.M. & Dries, Liesbeth & MacOurs, Karen, 2001. "Transition And Agricultural Labour," 2001 Annual meeting, August 5-8, Chicago, IL 20602, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
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  9. Yuri Andrienko & Sergei Guriev, 2003. "Determinants of Interregional Mobility in Russia: Evidence from Panel Data," William Davidson Institute Working Papers Series 551, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
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  10. Klugman, Jeni & Micklewright, John & Redmond, Gerry, 2002. "Poverty in the Transition: Social Expenditures and the Working-Age Poor," CEPR Discussion Papers 3389, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  11. 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). [Downloadable!]
  12. Rozelle, Scott & Swinnen, Johan F.M., 2000. "Transition And Agriculture," Working Papers 11948, University of California, Davis, Department of Agricultural and Resource Economics. [Downloadable!]
  13. Irena Grosfeld & Claudia Senik-Leygonie & Thierry Verdier & Stanislav Kolenikov & Elena Paltseva, 1999. "Dynamism and Inertia on the Russian Labour Market: A Model of Segmentation," William Davidson Institute Working Papers Series 246, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
    Other versions:
  14. Laura Solanko, 2002. "Fiscal competition in a transition economy," Public Economics 0209002, EconWPA. [Downloadable!]
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