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Wage Determination in Russia: An Econometric Investigation

  • Peter J. Luke
  • Mark E. Schaffer

Using a firm level dataset from four regions of Russia covering 1996/97, an investigation was carried out into how the surplus created within the firm is divided between profits and wages. An efficient bargaining framework based on the work of Svejnar (1986) is employed which takes into account the alternative wage or outside option available to employees in the firm as well as the value added per employee. Statistical differences in the share of the surplus taken by employees employed in state, private and mixed forms of firms are found. In addition, the results prove sensitive to the presence of outliers and influential observations. A variety of diagnostic methods are employed to identify these influential observations and robust methods are employed to lessen the influence of them. Whereas in practice some of the diagnostic and robust methods utilised proved incapable of identifying or accommodating the gross outlier(s) in the data, the more successful methods included robust regression, Winsorising, the Hadi and Siminoff algorithm, Cook's Distance and Covratio.

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Paper provided by William Davidson Institute at the University of Michigan in its series William Davidson Institute Working Papers Series with number 295.

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Length: pages
Date of creation: 01 Mar 2000
Date of revision:
Handle: RePEc:wdi:papers:2000-295
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  1. Lockwood, Ben & Manning, Alan, 1989. "Dynamic Wage-Employment Bargaining with Employment Adjustment Costs," Economic Journal, Royal Economic Society, vol. 99(398), pages 1143-58, December.
  2. 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).
  3. 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.
  4. Svejnar, Jan, 1986. "Bargaining Power, Fear of Disagreement, and Wage Settlements: Theory and Evidence from U.S. Industry," Econometrica, Econometric Society, vol. 54(5), pages 1055-78, September.
  5. Currie, Janet, 1991. "Employment Determination in a Unionized Public-Sector Labor Market: The Case of Ontario's School Teachers," Journal of Labor Economics, University of Chicago Press, vol. 9(1), pages 45-66, January.
  6. MaCurdy, Thomas E & Pencavel, John H, 1986. "Testing between Competing Models of Wage and Employment Determination in Unionized Markets," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages S3-S39, June.
  7. Layard, R. & Nickell, S., 1988. "Is Unemployment Lower If Unions Bargain Over Employment?," Papers 308, London School of Economics - Centre for Labour Economics.
  8. Orley Ashenfelter & James N. Brown, 1985. "Testing the Efficiency of Employment Contracts," Working Papers 573, Princeton University, Department of Economics, Industrial Relations Section..
  9. Reiss, Peter C., 1990. "Detecting multiple outliers with an application to R&D productivity," Journal of Econometrics, Elsevier, vol. 43(3), pages 293-315, March.
  10. McDonald, Ian M & Solow, Robert M, 1981. "Wage Bargaining and Employment," American Economic Review, American Economic Association, vol. 71(5), pages 896-908, December.
  11. Prasnikar, Janez, et al, 1994. "Behavior of Participatory Firms in Yugoslavia: Lessons for Transforming Economies," The Review of Economics and Statistics, MIT Press, vol. 76(4), pages 728-41, November.
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