Abstract
Using a unique data set of medium and large enterprises (MLEs), which covers four Russian regions and the three sectors of manufacturing and mining, construction, and trade and distribution, we estimate fixed-effects specifications of static labor demand equations for the year 1997. The most important conclusion that can be drawn is that, even though labor demand is relatively inelastic in international perspective, six years into transition Russian MLEs are responsive to wage changes in their employment decisions. A second interesting finding shows that there are distinct differences in the behavior of state-owned enterprises, which exhibit a weaker wage employment trade-off than do privatized and partially privatized firms. Looking at the entire sample and various subsamples, we also try to relate the estimated wage elasticities to the empirical evidence on three of Marshall's rules of derived demand. Our results show that investigating empirically these rules seems a promising avenue for establishing some of the driving forces behind labor demand in Russia. J. Comp. Econ., March 2002, 30(1), pp. 134-159. Leuven Institute for Central and East European Studies (LICOS), Center for Transition Economics, Catholic University of Leuven, Belgium; Center for Economic Policy Research, London, United Kingdom; and Institute for the Study of Labor (IZA), Bonn, Germany; and Heriot-Watt University, Edinburgh, United Kingdom; Institute for the Study of Labor (IZA), Bonn, Germany; and William Davidson Institute, Ann Arbor, Michigan.
| Original language | English |
|---|---|
| Pages (from-to) | 134-159 |
| Number of pages | 26 |
| Journal | Journal of Comparitive Economics |
| Volume | 30 |
| Issue number | 1 |
| DOIs | |
| Publication status | Published - 2002 |
| Externally published | Yes |
Funding
Using a unique data set of medium and large enterprises (MLEs), which covers four Russian regions and the three sectors of manufacturing and mining, construction, and trade and distribution, we estimate fi ed-effects specification of static labor demand equations for the year 1997. The most important conclusion that can be drawn is that, even though labor demand is relatively inelastic in international perspective, six years into transition Russian MLEs are responsive to wage changes in their employment decisions. A second interesting findin shows that there are distinct differences in the behavior of state-owned 1 The authors are extremely grateful to Atanas Christev for important discussions and assistance in the later stages of the production of this paper. They also thank Frederic Warzynski for research assistance. Discussions with Mark Schaffer and the comments of John Earle and three anonymous referees helped us to improve the paper considerably. In addition, we are grateful to Tatyana Gorbacheva, Douglas Lippoldt, Stefan Lutz, Andrew Newell, and Christoph M. Schmidt as well as participants at the CEPR– ESRC workshop at Sussex University (June 1999), at an IZA workshop in Bonn (February 2000), at an EERC–IZA workshop in Kiev, and at the, 2001 CEPR–WDI conference in Portoroz, Slovenia, for additional valuable comments. We also thank the Fritz Thyssen Foundation for financia support within the project “Economic Reform and the Microeconomics of Labor Market Adjustment in the Russian Federation.”
ASJC Scopus subject areas
- Economics and Econometrics