Vladimir Gimpelson1, Rostislav Kapeliushnikov1, Tatyana Ratnikova1
  • 1 National Research University Higher School of Economics, 20 Myasnitskaya Str., Moscow, 101000, Russian Federation

Fear of Unemployment and Wage Flexibility in Russia

2003. Vol. 7. No. 3. P. 341–370 [issue contents]

Main motivation of this study is to explain non-standard evolution of the Rus­sian unemployment in the 90-es. It has never reached peak values that are typical for many CEE countries and has been much lower than we could expect given ac­tual duration and depth of the transformational recession. There is a huge gap be­tween what was initially expected and what has actually been observed. We assume that this phenomenon can be partially attributed to strong and persistent fear of job loss and unemployment in the Russian society. 
Regardless of the actual rate of unemployment the fear could affect workers' behavior. More people are scared of losing jobs more they should be ready to accept concessions in order to preserve job stability. This in turn increases probability of relative (and in some cases even of absolute) wage decline. Using RLMS microdata for 1994-2000, we explore a) relationships between the fear of unemployment and actual unemployment over time and b) effects of fear of unemployment on real wa­ges, incidence and size of wage arrears. Estimating cross-sections and panel regres­sions for the years 1994-2000 we show that a) earlier in the period, fear of unem­ployment had very weak correlations with actual unemployment situation. However, over time this link became statistically significant; b) initially the fear of unemploy­ment was effective in bringing wages down and allowing wage arrears to grow, while effects of actual unemployment were of little significance. By the middle of the period the effects of fear decreased and the effects of unemployment became more significant. These outcomes can be explained by actual dynamics of unem­ployment and accumulation of learning in the Russian society.

Citation: Gimpelson V., Kapeliushnikov R., Ratnikova T. (2003) Strakh bezrabotitsy i gibkost' zarabotnoy platy v Rossii [Fear of Unemployment and Wage Flexibility in Russia]. HSE Economic Journal , vol. 7, no 3, pp. 341-370 (in Russian)
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