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Investment in Human Capital under Economic Transformation in Russia

  • Nesterova Daria

    ()

  • Sabirianova Klara

    ()

This paper employs the data from Russian Longitudinal Monitoring Survey (RLMS) to study human capital determinants of wage and employment changes from 1992 to 1996. We analyze how returns to schooling are changing over the transition period in Russia. The evidence shows that at the beginning of economic reforms (1992-1994) unconstrained wage setting shifted returns in favor of more educated individuals. But the consequent structural changes along with devaluation of some skills and reduction of supply of skilled jobs lead to a decline in the rates of return to schooling. The returns to experience also tend to decline substantially. Compared with workers of state-owned and privatized companies, workers of new private firms have greater returns to schooling and smaller returns to experience. We also find robust evidence of a strong impact on wages caused by firm–specific and regional characteristics. Among other results, higher education tends to reduce the probability of exit from employment and unemployment.

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Paper provided by EERC Research Network, Russia and CIS in its series EERC Working Paper Series with number 99-04e.

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Length: 52 pages
Date of creation: 10 Dec 1998
Date of revision:
Handle: RePEc:eer:wpalle:99-04e
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  1. Orazem, Peter F. & Vodopivec, Milan, 1994. "Winners and losers in transition : returns to education, experience, and gender in Slovenia," Policy Research Working Paper Series 1342, The World Bank.
  2. van Ours, J.C. & Ridder, G., 1995. "Job matching and job competition : Are lower educated workers at the back of job queues?," Other publications TiSEM 2b08ab23-16f0-4f9a-9bdd-7, Tilburg University, School of Economics and Management.
  3. Garen, John, 1984. "The Returns to Schooling: A Selectivity Bias Approach with a Continuous Choice Variable," Econometrica, Econometric Society, vol. 52(5), pages 1199-1218, September.
  4. Newell, Andrew & Reilly, Barry, 1996. "The gender wage gap in Russia: Some empirical evidence," Labour Economics, Elsevier, vol. 3(3), pages 337-356, October.
  5. Robert J. Flanagan, 1995. "Wage Structures in the Transition of the Czech Economy," IMF Staff Papers, Palgrave Macmillan, vol. 42(4), pages 836-854, December.
  6. Graeser, Paul, 1988. "Human Capital in a Centrally Planned Economy: Evidence," Kyklos, Wiley Blackwell, vol. 41(1), pages 75-98.
  7. Murphy, Kevin M & Welch, Finis, 1990. "Empirical Age-Earnings Profiles," Journal of Labor Economics, University of Chicago Press, vol. 8(2), pages 202-29, April.
  8. repec:pri:indrel:dsp01fb494841t is not listed on IDEAS
  9. Ashenfelter, Orley & Ham, John, 1979. "Education, Unemployment, and Earnings," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages S99-116, October.
  10. Jacob A. Mincer, 1974. "Introduction to "Schooling, Experience, and Earnings"," NBER Chapters, in: Schooling, Experience, and Earnings, pages 1-4 National Bureau of Economic Research, Inc.
  11. Gregory, Paul R & Collier, Irwin L, Jr, 1988. "Unemployment in the Soviet Union: Evidence from the Soviet Interview Project," American Economic Review, American Economic Association, vol. 78(4), pages 613-32, September.
  12. Heckman, James J, 1979. "Sample Selection Bias as a Specification Error," Econometrica, Econometric Society, vol. 47(1), pages 153-61, January.
  13. Joseph G. Altonji, 1991. "The Demand for and Return to Education When Education Outcomes are Uncertain," NBER Working Papers 3714, National Bureau of Economic Research, Inc.
  14. Mark C. Berger, 1988. "Predicted Future Earnings and Choice of College Major," ILR Review, Cornell University, ILR School, vol. 41(3), pages 418-429, April.
  15. Robert J. Flanagan, 1995. "Wage Structure in the Transition of the Czech Economy," IMF Working Papers 95/36, International Monetary Fund.
  16. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1, September.
  17. Gregory, Paul R & Kohlhase, Janet E, 1988. "The Earnings of Soviet Workers: Evidence from the Soviet Interview Project," The Review of Economics and Statistics, MIT Press, vol. 70(1), pages 23-35, February.
  18. Jacob Mincer, 1958. "Investment in Human Capital and Personal Income Distribution," Journal of Political Economy, University of Chicago Press, vol. 66, pages 281.
  19. Nickell, Stephen, 1979. "Education and Lifetime Patterns of Unemployment," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages S117-31, October.
  20. Berger, Mark C, 1985. "The Effect of Cohort Size on Earnings Growth: A Reexamination of the Evidence," Journal of Political Economy, University of Chicago Press, vol. 93(3), pages 561-73, June.
  21. Heckman, James J, 1976. "A Life-Cycle Model of Earnings, Learning, and Consumption," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages S11-44, August.
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