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Labor Market Dynamics in Russia

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  • Mark C. Foley

Abstract

Following the dissolution of the Soviet Union in December 1991, Russia experienced a series of economic shocks, resulting in large decreases in output but limited change in employment. Using information contained in a nationally representative longitudinal survey of Russian citizens, this research analyzes the labor market behavior of individuals from 1992 to 1996 during the transition to a market economy. Under Markovian assumptions, the pattern of transitions between labor market states is identified. Results indicate that the state sector has declined, but that the emerging private sector has played a limited role in alleviating growing unemployment. The probability of losing a job increased 75 percent from 1992 to 1996 while the re-employment probability declined by 24 percent, leading to an increase in long-term unemployment. Multinomial logit estimates demonstrate that workers with a personal ownership stake in their firm, the prevalence of which has more than tripled since 1992, are significantly less likely to lose their job or change to a new one. Men are more likely to make a transition to non-state employment, while women are more apt not only to move into the state sector, but also to remain in a state sector job. The relative instability of the private sector and self-employment, which are predominated by men and younger persons, is evident from higher flows into unemployment from these sectors. In contrast to the state sector, hiring in the private sector is primarily from the pool of employed individuals. The growing wage arrears crisis has not influenced labor market transitions, but the incidence of forced leaves is strongly and positively associated with dropping out of the labor force and changing jobs. Education has become a factor in exiting unemployment to a job. While there was no distinction by level of education in 1992-93, by 1995-96 individuals with higher, special secondary, or ordinary secondary education are more likely to find employment than those with primary education or less. University or graduate degrees carry the greatest weight, increasing the re-employment probability by 27.5 percentage points. Higher and secondary education provided protection against job loss initially, but by 1996 only higher education provides a distinct advantage in maintaining employment. This result is suggestive of a divergence between education and skills acquired in the Soviet era and those demanded by the jobs of an emerging market economy.

Suggested Citation

  • Mark C. Foley, 1997. "Labor Market Dynamics in Russia," Working Papers 780, Economic Growth Center, Yale University.
  • Handle: RePEc:egc:wpaper:780
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    File URL: http://www.econ.yale.edu/growth_pdf/cdp780.pdf
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Sorm, Vit & Terrell, Katherine, 2000. "Sectoral Restructuring and Labor Mobility: A Comparative Look at the Czech Republic," Journal of Comparative Economics, Elsevier, vol. 28(3), pages 431-455, September.
    2. Broadman, Harry G. & Recanatini, Francesca, 2001. "Is Russia restructuring ? new evidence on job creation and destruction," Policy Research Working Paper Series 2641, The World Bank.
    3. Steven Stillman, 2000. "Labor Market Uncertainty and Private Sector Labor Supply in Russia," William Davidson Institute Working Papers Series 359, William Davidson Institute at the University of Michigan.
    4. Kuchibhotla, Murali, 2013. "Three essays in development economics," ISU General Staff Papers 201301010800004461, Iowa State University, Department of Economics.
    5. Linz, Susan J. & Semykina, Anastasia, 2008. "Attitudes and performance: An analysis of Russian workers," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 37(2), pages 694-717, April.
    6. Aysit Tansel & H. Mehmet Taşçı, 2010. "Hazard Analysis of Unemployment Duration by Gender in a Developing Country: The Case of Turkey," LABOUR, CEIS, vol. 24(4), pages 501-530, December.
    7. Aysit TANSEL & H. Mehmet TASCI, "undated". "Determinants of Unemployment Duration for Men and Women in Turkey," Middle East and North Africa 330400055, EcoMod.
    8. Natalia V. Smirnova, 2003. "Re-employment Probabilities and Wage Offer Function for Russian Labor Market," William Davidson Institute Working Papers Series 547, William Davidson Institute at the University of Michigan.
    9. Lehmann, Hartmut & Wadsworth, Jonathan & Acquisti, Alessandro, 1999. "Grime and Punishment: Job Insecurity and Wage Arrears in the Russian Federation," Journal of Comparative Economics, Elsevier, vol. 27(4), pages 595-617, December.
    10. Lehmann, Hartmut & Wadsworth, Jonathan & Acquisti, Alessandro, 1999. "Grime and Punishment: Insecurity and Wage Arrears in the Russian Federation," IZA Discussion Papers 65, Institute for the Study of Labor (IZA).
    11. Lauerová, Jana Stefanová & Terrell, Katherine, 2002. "Explaining Gender Differences in Unemployment with Micro Data on Flows in Post-Communist Economies," IZA Discussion Papers 600, Institute for the Study of Labor (IZA).
    12. repec:pit:wpaper:270 is not listed on IDEAS
    13. Tito Boeri & Katherine Terrell, 2002. "Institutional Determinants of Labor Reallocation in Transition," Journal of Economic Perspectives, American Economic Association, vol. 16(1), pages 51-76, Winter.
    14. Vit Storm & Katherine Terrell, 1999. "A Comparitive Look at Labor Mobility in the Czech Republic: Where Have all the Workers Gone?," William Davidson Institute Working Papers Series 140, William Davidson Institute at the University of Michigan.
    15. Klara Z. Sabirianova, 2000. "The Great Human Capital Reallocation: An Empirical Analysis of Occupational Mobility in Transitional Russia," William Davidson Institute Working Papers Series 309, William Davidson Institute at the University of Michigan.
    16. Mark C. Foley, 1997. "Determinants of Unemployment Duration in Russia," Working Papers 779, Economic Growth Center, Yale University.
    17. Natalia Smirnova, 2003. "Job Search Behavior of Unemployed in Russia," William Davidson Institute Working Papers Series 2003-629, William Davidson Institute at the University of Michigan.
    18. Heinrich Hockmann & Michael Kopsidis, 2007. "What Kind of Technological Change for Russian Agriculture? The Transition Crisis of 1991-2005 from the Induced Innovation Theory Perspective," Post-Communist Economies, Taylor & Francis Journals, vol. 19(1), pages 35-52.
    19. Hartmut Lehmann & Jonathon Wadsworth & Alessandro Acquisti, 1997. "Grime and Punishment: Employment, Wages and Wage Arrears in the Russian Federation," William Davidson Institute Working Papers Series 103, William Davidson Institute at the University of Michigan.
    20. Tasci, H. Mehmet & Tansel, Aysit, 2005. "Unemployment and Transitions in the Turkish Labor Market: Evidence from Individual Level Data," IZA Discussion Papers 1663, Institute for the Study of Labor (IZA).
    21. Kuchibhotla, Murali & Orazem, Peter F. & Ravi, Sanjana, 2017. "The Scarring Effects of Youth Joblessness in Sri Lanka," ISU General Staff Papers 201707310700001029, Iowa State University, Department of Economics.

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