Why Russian Workers Do Not Move: Attachment of Workers Through In-Kind Payments
AbstractWe 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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Date of creation: 01 Oct 1999
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Other versions of this item:
- Guido Friebel, 2000. "Why Russian Workers do not Move: Attachment of Workers through In-Kind Payments," Econometric Society World Congress 2000 Contributed Papers 1376, Econometric Society.
- Friebel, Guido & Guriev, Sergei, 2000. "Why Russian Workers Do Not Move: Attachment Of Workers Through In-Kind Payments," CEPR Discussion Papers 2368, C.E.P.R. Discussion Papers.
- B31 - Schools of Economic Thought and Methodology - - History of Economic Thought: Individuals - - - Individuals
- D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
- J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
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