Research seminar «Storm of Change: Wage Policy and Workers’ Mobility in a Russian Firm in Early Transition»

Speaker: Hartmut Lehmann (CLMS HSE, IZA, University of Bologna).

Theme: Storm of Change: Wage Policy and Workers’ Mobility in a Russian Firm in Early Transition.

We employ a unique data set of personnel records from a Russian firm to study the evolution of wages and workers’ mobility during the beginning of transition period 1992–1995. This period was characterized by great turmoil in the Russian economy and by a high incidence of wage arrears across the economy. The firm we study was able to make a successful transition to the market economy by 1996. While real wages and worker turnover in late transition are well explained by efficiency wage models, they fail to explain the patterns observed during early transition. We aim for alternative explanations that are consistent with the empirical evidence. Our findings suggest that the firm was not able to avoid wage arrears, that is, the non-payment of wages, but in an attempt to control labor turnover used promotions, demotions and lateral job moves of workers as alternative mechanisms to adjust the workforce.

Joint work with Mikhail Ananyev (Bonn Graduate School) and Thomas Dohmen (University of Bonn, IZA).