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Wage Policies of a Russian Firm and the Financial Crisis of 1998: Evidence from Personnel Data - 1997 to 2002

Author

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  • Thomas Dohmen
  • Hartmut Lehmann
  • Mark E. Schaffer

Abstract

We use a rich personnel data set from a Russian firm for the years 1997 to 2002 to analyze how the financial crisis in 1998 and the resulting change in external labor market conditions affect the wages and the welfare of workers inside a firm. We provide evidence that large shocks to external conditions affect the firm's personnel policies, and show that the burden of the shock is not evenly spread across the workforce. The firm takes advantage of a high-inflationary environment and of a fall in workers' outside options after the financial crisis and cuts real wages. Earnings are curbed most for those who earned the highest rents, resulting in a strong compression of real wages. The fact that real wages and real compensation levels never recovered to pre-crisis levels even though the firm's financial situation was better in 2002 than before the crisis and the differential treatment of employee groups within the firm can be taken as evidence that market forces strongly influence the wage policies of our firm.

Suggested Citation

  • Thomas Dohmen & Hartmut Lehmann & Mark E. Schaffer, 2008. "Wage Policies of a Russian Firm and the Financial Crisis of 1998: Evidence from Personnel Data - 1997 to 2002," Discussion Papers of DIW Berlin 771, DIW Berlin, German Institute for Economic Research.
  • Handle: RePEc:diw:diwwpp:dp771
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    References listed on IDEAS

    as
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    Cited by:

    1. repec:mup:actaun:actaun_2018066010263 is not listed on IDEAS
    2. Thomas Dohmen & Hartmut Lehmann & Anzelika Zaiceva, 2008. "The Gender Earnings Gap inside a Russian Firm: First Evidence from Personnel Data - 1997 to 2002 ; Updated Version," ESCIRRU Working Papers 6, DIW Berlin, German Institute for Economic Research.
    3. Grund, Christian & Hofmann, Tanja, 2017. "The Dispersion of Bonus Payments within and between Firms," IZA Discussion Papers 10642, Institute for the Study of Labor (IZA).
    4. repec:nea:journl:y:2018:i:37:p:203-212 is not listed on IDEAS
    5. repec:spr:jlabre:v:38:y:2017:i:3:d:10.1007_s12122-017-9254-7 is not listed on IDEAS

    More about this item

    Keywords

    Internal labor markets; wage policies of a firm; personnel data; Russia;

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • P23 - Economic Systems - - Socialist Systems and Transition Economies - - - Factor and Product Markets; Industry Studies; Population

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