Grime and Punishment: Job Insecurity and Wage Arrears in the Russian Federation

Using information from two complementary household survey data sets, we show that for many Russian workers, the dominant form of labor market adjustment in the transition process has been the delayed receipt of wages. Other forms of adjustment at the intensive margin have not been used much. Wage arrears are found across the private, state and budgetary sector. There are large regional variations in the incidence of wage arrears. Workers in the metropolitan center are significantly less affected by delayed and incomplete wage payments than workers in the provinces. There is less evidence that individual characteristics contribute much toward the incidence of wage arrears. As with the incidence of unemployment however, there is evidence that the persistence of arrears is concentrated on a subset of the working population. We show that workers can only exercise the exit option of a job quit from a firm paying wages in arrears if the outside labor market is sufficiently dynamic.