Employment Decisions during the First Decade of Transition in Russia

Since the fall of communism, Russia has undergone an extraordinary transition to a market economy. Under the Soviet system all able-body adults were expected to be employed and were for the most part. By 1998, the employment rate had fallen to 71% for men and 67% for women, which is much lower than Soviet rates and is also low by international standards. This paper uses representative panel data from the Russian Longitudinal Monitoring Survey to examine the factors which influence employment decisions for rural and urban men and women. Both static models of employment and models which examine transitional dynamics are estimated. Among the findings: Younger cohorts of women, especially those with less education, appear to have weaker preferences for employment, and thus much lower employment rates than older women. Demand shocks caused by the closing of government enterprises and other macroeconomic problems have had a strong negative effect on employment in rural areas. In urban areas, the closing of government enterprises is associated with higher levels of employment suggesting that these communities have better functioning labor markets and / or more resources available for new development.