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Marshall and Labour Demand in Russia: Going Back to Basics

  • Konings, Jozef

    ()

    (KU Leuven)

  • Lehmann, Hartmut

    ()

    (University of Bologna)

Using a unique enterprise-level data set, which covers the regions Moscow City, Chelyabinsk, Krasnoyarsk and Chuvashia and the three sectors manufacturing and mining, construction and trade and distribution, we estimate Russian labour demand equations for the year 1997. The most important conclusion that can be drawn is that labour demand is inelastic in international perspective if we estimate a labour demand equation for all regions and all sectors combined. So, Russian MLEs well into the transition still exhibit peculiar behaviour as far as wage employment trade-offs are concerned. We try to relate this inelastic labour demand to basic neoclassical theory by testing Marshall’s rules of derived demand. Our results show that testing these rules seems a promising avenue for establishing some of the driving forces, which are behind labour demand in Russia.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 372.

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Length: 71 pages
Date of creation: Sep 2001
Date of revision:
Publication status: published in: Journal of Comparative Economics, 2002, 30 (1), 160-190
Handle: RePEc:iza:izadps:dp372
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  1. Luke, Peter L. & Schaffer, Mark E, 2000. "Wage Determination in Russia: An Econometric Investigation," IZA Discussion Papers 143, Institute for the Study of Labor (IZA).
  2. Hartmut Lehmann & Jonathan Wadsworth, 1999. "Tenures that Shook the World: Worker Turnover in Russia, Poland and Britain," William Davidson Institute Working Papers Series 160, William Davidson Institute at the University of Michigan.
  3. Jozef Konings & Patrick Van Cayseele & Frederic Warzynski, 1999. "The Dynamics of Industrial Markups in Two Small Open Economies: Does National Competition Policy Matter ?," Center for Economic Studies - Discussion papers ces9914, Katholieke Universiteit Leuven, Centrum voor Economische Studiën.
  4. Levinsohn, J., 1991. "Testing the Imports-As-Market-Discipline Hypothesis," Working Papers 272, Research Seminar in International Economics, University of Michigan.
  5. Robert E. Hall, 1986. "Market Structure and Macroeconomic Fluctuations," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 17(2), pages 285-338.
  6. Brown, J David & Earle, John S, 2000. "Competition And Firm Performance: Lessons From Russia," CEPR Discussion Papers 2444, C.E.P.R. Discussion Papers.
  7. 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).
  8. Ian Domowitz & R. Glenn Hubbard & Bruce C. Petersen, 1986. "Market Structure and Cyclical Fluctuations in U.S. Manufacturing," NBER Working Papers 2115, National Bureau of Economic Research, Inc.
  9. Hall, Robert E, 1988. "The Relation between Price and Marginal Cost in U.S. Industry," Journal of Political Economy, University of Chicago Press, vol. 96(5), pages 921-47, October.
  10. Newell, Andrew & Reilly, Barry, 1996. "The gender wage gap in Russia: Some empirical evidence," Labour Economics, Elsevier, vol. 3(3), pages 337-356, October.
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