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Why Russian Workers do not Move: Attachment of Workers through In-Kind Payments

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  • Guido Friebel

    (IDEI)

Abstract

We relate the phenomena of sluggish interregional labour reallocation and in-kind compensation in Russia to 'attachment' strategies of firms: Paying wages in non- monetary forms makes it hard for workers to raise the cash needed for quitting their region in order to find better jobs in more prosperous regions. While attachment may facilitate worker-specific investments that do not pay off if workers are expected to leave, it also eliminates workers' outside options. Hence, firms may use it to exploit workers. Surprisingly, exploitation through attachment does not only occur in monopsonistic regional labour markets. 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 are less probable to move than workers who do receive their wages in cash.

Suggested Citation

  • 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.
  • Handle: RePEc:ecm:wc2000:1376
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    References listed on IDEAS

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    Cited by:

    1. Osborne, Stefan & Trueblood, Michael A., 2001. "An Examination Of Economic Efficiency Of Russian Crop Output In The Reform Period," 2001 Annual meeting, August 5-8, Chicago, IL 20548, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Johan F. M. Swinnen & Liesbeth Dries & Karen Macours, 2005. "Transition and agricultural labor," Agricultural Economics, International Association of Agricultural Economists, vol. 32(1), pages 15-34, January.
    3. Fardmanesh, Mohsen & Tan, Li, 2003. "Wage and price control policies in transition economies," Journal of Development Economics, Elsevier, vol. 70(1), pages 173-200, February.
    4. Haaparanta, Pertti & Juurikkala, Tuuli & Lazareva, Olga & Pirttilä, Jukka & Solanko, Laura & Zhuravskaya, Ekaterina, 2003. "Firms and public service provision in Russia," BOFIT Discussion Papers 16/2003, Bank of Finland, Institute for Economies in Transition.
    5. 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.
    6. Klugman, Jeni & Micklewright, John & Redmond, Gerry, 2002. "Poverty in the Transition: Social Expenditures and the Working-Age Poor," CEPR Discussion Papers 3389, C.E.P.R. Discussion Papers.
    7. Christopher J. Gerry & Byung-Yeon Kim & Carmen A Li, 2004. "The gender wage gap and wage arrears in Russia: Evidence from the RLMS," Journal of Population Economics, Springer;European Society for Population Economics, vol. 17(2), pages 267-288, June.
    8. Ariane Lambert-Mogiliansky & Konstantin Sonin & Ekaterina Zhuravskaya, 2003. "Capture of Bankruptcy: Theory and Russian Evidence," Working Papers w0038, Center for Economic and Financial Research (CEFIR).
    9. Solanko, Laura, 2001. "Fiscal competition in a transition economy," BOFIT Discussion Papers 4/2001, Bank of Finland, Institute for Economies in Transition.
    10. Linz, Susan J., 2004. "Motivating Russian workers: analysis of age and gender differences," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 33(3), pages 261-289, July.
    11. 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.
    12. Guido Friebel & Sergei Guriev, 2005. "Attaching Workers through In-Kind Payments: Theory and Evidence from Russia," World Bank Economic Review, World Bank Group, vol. 19(2), pages 175-202.
    13. Haney, Michael & Shkaratan, Maria, 2003. "Mine closure and its impact on the community : five years after mine closure in Romania, Russia and Ukraine," Policy Research Working Paper Series 3083, The World Bank.
    14. Ruslan Gurtoviy & Luis G. González, 2008. "How Much to Pay in Cash? Employee Retention via Stock Options," Papers on Strategic Interaction 2004-24, Max Planck Institute of Economics, Strategic Interaction Group.
    15. Grosfeld, Irena & Senik-Leygonie, Claudia & Verdier, Thierry & Kolenikov, Stanislav & Paltseva, Elena, 2001. "Workers' Heterogeneity and Risk Aversion: A Segmentation Model of the Russian Labor Market," Journal of Comparative Economics, Elsevier, vol. 29(2), pages 230-256, June.
    16. Elena Kazakova, 2005. "Wages in a Growing Russia: When is a Ten Percent Rise in the Gender Pay Gap Good News?," CERGE-EI Working Papers wp257, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    17. Fleischman, Gary & Herz, Paul, 2005. "An empirical investigation of trends in barter activity in the Russian Federation," The International Journal of Accounting, Elsevier, vol. 40(1), pages 39-63.
    18. Sergei Guriev & Barry W. Ickes, 2000. "Microeconomic Aspects of Economic Growth in Eastern Europe and the Former Soviet Union, 1950-2000," William Davidson Institute Working Papers Series 348, William Davidson Institute at the University of Michigan.
    19. Rozelle, Scott & Swinnen, Johan F.M., 2000. "Transition And Agriculture," Working Papers 11948, University of California, Davis, Department of Agricultural and Resource Economics.
    20. Jan J. Rutkowski & Stefano Scarpetta, 2005. "Enhancing Job Opportunities : Eastern Europe and the Former Soviet Union," World Bank Publications, The World Bank, number 7408.

    More about this item

    JEL classification:

    • 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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