Are Interregional Wage Differentials in Russia Compensative?
Interregional differentials in nominal wages in the Russian Federation are huge compared to other countries. Using the NOBUS micro-data and a methodology based on the estimation of the wage equation augmented by aggregate regional characteristics, we show that these differentials have a compensative nature. Russian workers receive wage compensations for living in regions with a higher price level and worse non-pecuniary characteristics, such as a relatively low life expectancy, a high level of air pollution, poor medical services and a colder climate. After adjusting for these regional characteristics, the relative ranking of regions in terms of average wages changes considerably. Moreover, regional nominal wages become positively correlated with interregional migration flows. According to our estimates, half of the interregional wage variation between workers with similar productive characteristics should be considered to be compensative. These results support the view that the best policy reaction to the current high interregional wage differentials should be the removal of migration barriers and a reduction in migration costs. In general, our results show that wage compensations for regional disamenities along with differences in employment composition are able to account for about three fourths of the observed interregional variation in wages.
|Date of creation:||2007|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.diw.de/en
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.:
- Knapp, Thomas A. & Graves, Philip E., 1989. "On the role of amenities in models of migration and regional development," MPRA Paper 19914, University Library of Munich, Germany.
- Olivier Jean Blanchard & Lawrence F. Katz, 1992. "Regional Evolutions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(1), pages 1-76.
- Decressin, Jörg & Fatás, Antonio, 1994.
"Regional Labour Market Dynamics in Europe,"
CEPR Discussion Papers
1085, C.E.P.R. Discussion Papers.
- Bellante, Don, 1979. "The North-South Differential and the Migration of Heterogeneous Labor," American Economic Review, American Economic Association, vol. 69(1), pages 166-75, March.
- Heleniak, Timothy, 1999. "Migration from the Russian north during the transition period," Social Protection Discussion Papers 20818, The World Bank.
- Inmaculada Garcia & Jose Alberto Molina, 2002. "Inter-regional wage differentials in Spain," Applied Economics Letters, Taylor & Francis Journals, vol. 9(4), pages 209-215.
- José António Cabral Vieira & João Pedro Almeida Couto & Maria Teresa Borges Tiago, 2005.
"Inter-regional Wage Dispersion in Portugal,"
ERSA conference papers
ersa05p160, European Regional Science Association.
- Blanchflower, D. & Oswald, A., 1989.
"The Wage Curve,"
340, London School of Economics - Centre for Labour Economics.
- 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.
- Blomquist, Glenn C & Berger, Mark C & Hoehn, John P, 1988. "New Estimates of Quality of Life in Urban Areas," American Economic Review, American Economic Association, vol. 78(1), pages 89-107, March.
- Fidrmuc, Jan, 2004.
"Migration and regional adjustment to asymmetric shocks in transition economies,"
Journal of Comparative Economics,
Elsevier, vol. 32(2), pages 230-247, June.
- Fidrmuc, Jan, 2003. "Migration and Regional Adjustment to Asymmetric Shocks in Transition Economies," CEPR Discussion Papers 3798, C.E.P.R. Discussion Papers.
- Jan Fidrmuc, 2002. "Migration and regional adjustment to asymmetric shocks in transition economies," CPB Discussion Paper 7, CPB Netherlands Bureau for Economic Policy Analysis.
- Berger, Mark C. & Blomquist, Glenn C. & Peter, Klara Sabirianova, 2003.
"Compensating Differentials in Emerging Labor and Housing Markets: Estimates of Quality of Life in Russian Cities,"
IZA Discussion Papers
900, Institute for the Study of Labor (IZA).
- Berger, Mark C. & Blomquist, Glenn C. & Sabirianova Peter, Klara, 2008. "Compensating differentials in emerging labor and housing markets: Estimates of quality of life in Russian cities," Journal of Urban Economics, Elsevier, vol. 63(1), pages 25-55, January.
- 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.
- Andrienko, Yuri & Guriev, Sergei, 2003. "Determinants of Interregional Mobility in Russia: Evidence from Panel Data," CEPR Discussion Papers 3835, C.E.P.R. Discussion Papers.
- Yuri Andrienko & Sergei Guriev, 2003. "Determinants of interregional mobility in Russia: evidence from panel data," Working Papers w0027, Center for Economic and Financial Research (CEFIR).
- Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
- Carlos R. Azzoni & Luciana M.S. Servo, 2002.
"Education, cost of living and regional wage inequality in Brazil,"
Review of Economic Design,
Springer, vol. 81(2), pages 157-175, 04.
- Carlos R. Azzoni & Luciana M.S. Servo, 2002. "Education, cost of living and regional wage inequality in Brazil," Economics of Governance, Springer, vol. 81(2), pages 157-175, 04.
- Luciana M.S. Servo & Carlos R. Azzoni, 2002. "Education, cost of living and regional wage inequality in Brazil," Papers in Regional Science, Springer, vol. 81(2), pages 157-175.
- Krueger, Alan B & Summers, Lawrence H, 1988. "Efficiency Wages and the Inter-industry Wage Structure," Econometrica, Econometric Society, vol. 56(2), pages 259-93, March.
- Reza, Ali M, 1978. "Geographical Differences in Earnings and Unemployment Rates," The Review of Economics and Statistics, MIT Press, vol. 60(2), pages 201-08, May.
- Blanchflower, David G. & Oswald, Andrew J., 2005.
"The Wage Curve Reloaded,"
IZA Discussion Papers
1665, Institute for the Study of Labor (IZA).
- Chiara Bentivogli & Patrizio Pagano, 1999. "Regional Disparities and Labour Mobility: the Euro-11 versus the USA," LABOUR, CEIS, vol. 13(3), pages 737-760, 09.
- Beeson, Patricia E & Eberts, Randall W, 1989.
"Identifying Productivity and Amenity Effects in Interurban Wage Differentials,"
The Review of Economics and Statistics,
MIT Press, vol. 71(3), pages 443-52, August.
- Patricia E. Beeson & Randall W. Eberts, 1987. "Identifying productivity and amenity effects in interurban wage differentials," Working Paper 8707, Federal Reserve Bank of Cleveland.
- Alexander Muravyev, 2006. "Human Capital Externalities: Evidence from the Transition Economy of Russia," Discussion Papers of DIW Berlin 629, DIW Berlin, German Institute for Economic Research.
- DuMond J.M. & Hisch, B.T. & Macpherson, D.A., 1996.
"Wage Differentials Across Labor Markets and Workers: Does Cost of Living Matter?,"
1996_08_01, Department of Economics, Florida State University.
- Dumond, J Michael & Hirsch, Barry T & Macpherson, David A, 1999. "Wage Differentials across Labor Markets and Workers: Does Cost of Living Matter?," Economic Inquiry, Western Economic Association International, vol. 37(4), pages 577-98, October.
- Graves, Philip E., 1983. "Migration with a composite amenity: the role of rents," MPRA Paper 19917, University Library of Munich, Germany.
- Greenwood, Michael J, et al, 1991. "Migration, Regional Equilibrium, and the Estimation of Compensating Differentials," American Economic Review, American Economic Association, vol. 81(5), pages 1382-90, December.
- Sahling, Leonard G & Smith, Sharon P, 1983. "Regional Wage Differentials: Has the South Risen Again?," The Review of Economics and Statistics, MIT Press, vol. 65(1), pages 131-35, February.
- Edward L. Glaeser & David C. Mare, 1994.
"Cities and Skills,"
NBER Working Papers
4728, National Bureau of Economic Research, Inc.
- Beeson, Patricia E., 1991. "Amenities and regional differences in returns to worker characteristics," Journal of Urban Economics, Elsevier, vol. 30(2), pages 224-241, September.
- Topel, Robert H, 1986. "Local Labor Markets," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages S111-43, June.
- Moulton, Brent R, 1990. "An Illustration of a Pitfall in Estimating the Effects of Aggregate Variables on Micro Unit," The Review of Economics and Statistics, MIT Press, vol. 72(2), pages 334-38, May.
When requesting a correction, please mention this item's handle: RePEc:diw:diwwpp:dp750. 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: (Bibliothek)
If references are entirely missing, you can add them using this form.