Should I Stay or Can I Go? Worker Attachment in Russia
Reallocation of workers from obsolete sectors to more pro…table ones is among the most important challenges for many former centrally planned economies on their road towards a market economy. Due to the Stalinist mode of industrialization, this problem has an important regional dimension: geographical mobility is required to reallocate labor from regions dominated by industries in decline to more prosperous areas. In Russia, however, labour market segmentation does not appear to decline. In this paper we argue that the very existence of inherited monopsonistic or oligopsonistic local labour market structure can obstruct workers’ ability to migrate. We analyze a model in which …rms have an incentive to ‘attach’ their workers, that is to restrict their ability to migrate decreasing workers’ outside option and increasing rents. While the rationale for attachment is straightforward, the key to the feasibility of attachment lies in the existence of cash constraints. We argue that the widespread use of in-kind wages and wage arrears in Russia may be explained as an attachment strategy of …rms: paying wages in nonmonetary forms makes it hard for workers to raise the cash needed for quitting the region. There are two main results of the model. First, attachment can only exist, if there are not too many …rms on the local labour market. Second, attachment involves a risk of worker exploitation, i.e., the attached workers are not compensated for their forgone option to migrate. Data of the Russian Longitudinal Monitoring Survey (RLMS) support our theory. Controlling for personal and regional characteristics, workers’ propensity to leave a region decreases with the degree of concentration of the local labour market.
|Date of creation:||Nov 2000|
|Date of revision:|
|Contact details of provider:|| Postal: 117418 Russia, Moscow, Nakhimovsky pr., 47, office 720|
Phone: +7 (495) 105 50 02
Fax: +7 (495) 105 50 03
Web page: http://www.cefir.ru
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Olivier Blanchard & Andrei Shleifer, 2001.
"Federalism With and Without Political Centralization: China Versus Russia,"
IMF Staff Papers,
Palgrave Macmillan, vol. 48(4), pages 8.
- Olivier Blanchard & Andrei Shleifer, 2000. "Federalism with and without Political Centralization: China versus Russia," NBER Working Papers 7616, National Bureau of Economic Research, Inc.
- Olivier Blanchard & Andrei Shleifer, 2000. "Federalism With and Without Political Centralization. China versus Russia," Harvard Institute of Economic Research Working Papers 1889, Harvard - Institute of Economic Research.
- 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.
- Aghion, P. & Blanchard, O.J., 1993.
"On the Speed of Transition in Central Europe,"
93-8, Massachusetts Institute of Technology (MIT), Department of Economics.
- Eric Maskin & Chenggang Xu, 2001.
"Soft budget constraint theories: From centralization to the market,"
The Economics of Transition,
The European Bank for Reconstruction and Development, vol. 9(1), pages 1-27, March.
- Maskin, Eric & Xu, Cheng-Gang, 2001. "Soft Budget Constraint Theories: From Centralization to the Market," CEPR Discussion Papers 2715, C.E.P.R. Discussion Papers.
- Andrei Shleifer & Robert W. Vishny, 1994. "Politicians and Firms," The Quarterly Journal of Economics, Oxford University Press, vol. 109(4), pages 995-1025.
- Philippe Aghion & Olivier Jean Blanchard, 1994. "On the Speed of Transition Central Europe," NBER Working Papers 4736, National Bureau of Economic Research, Inc.
- Price V. Fishback, 1998. "Operations of "Unfettered" Labor Markets: Exit and Voice in American Labor Markets at the Turn of the Century," Journal of Economic Literature, American Economic Association, vol. 36(2), pages 722-765, June.
- 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.
- 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.
- Grosfeld, Irena & Kolenikov, Stanislav & Paltseva, Elena & Sénik-Leygonie, Claudia & Verdier, Thierry, 1999. "Dynamism and Inertia on the Russian Labour Market: A Model of Segmentation," CEPR Discussion Papers 2224, C.E.P.R. Discussion Papers.
- Gimpelson, Vladimir & Lippoldt, Douglas, 1999. "Labour Turnover in Russia: Evidence from the Administrative Reporting of Enterprises in Four Regions," Transition Economics Series 4, Institute for Advanced Studies.
- Simon Commander & Mark Schankerman, 1997. "Enterprise restructuring and social benefits," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 5(1), pages 1-24, 05.
- Lambert-Mogiliansky, Ariane & Sonin, Konstantin & Zhuravskaya, Ekaterina, 2000. "Capture of Bankruptcy: Theory and Evidence from Russia," CEPR Discussion Papers 2488, C.E.P.R. Discussion Papers.
When requesting a correction, please mention this item's handle: RePEc:cfr:cefirw:w0008. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Julia Babich)
If references are entirely missing, you can add them using this form.