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Reallocation processes in the Russian labour market

Priority areas of development: economics

The project was implemented within the framework of the HSE Basic research program.

Present report summarizes the results of a project dedicated to the studies of Russian labour market dynamics conducted by the Centre for Labour Market Studies of NRU HSE in 2013-2015. Set of studies comprising present report cover various aspects of the mobility patterns of the Russian labor market. Mobility on the labour market is one of the main mechanisms of its dynamics. Key labour market agents adapt to the economic, technological and institutional changes by means of mobility between occupations, industries and enterprises. Studies conducted allowed clarifying the distinctive characteristics of dynamic processes on the Russian labour market that define its current configuration. They were aimed at the investigation of both labour transition and inhibition factors.

Research object of the surveys presented in the report consists of the dynamics of worker flows and reallocation of jobs.

Research purpose of the surveys is the comprehensive analysis of Russian labour market reallocation processes, its economic and social consequences.

Empirical base of the research is largely provided by the Russia Longitudinal Monitoring Survey – Higher School of Economics (RLMS-HSE) covering the period of 2000-2014. Data from the international survey KLEMS were used in order to analyze Russian labour market in a cross-country perspective. Official data collected by Federal State Statistics Service (“Rosstat”) for the period of 2000-2014 as well as the micro-data of the representative survey of Russian manufacturing enterprises “Russian Firms in a Global Economy” (RUFIGE) conducted in 2014 should also be mentioned on their own account. Important information was also provided by the special supplement of RLMS-HSE that allowed tracking the employment histories of respondents from January 2003 till September 2008.     

Research results showed that the degree of labour mobility in Russia is very high, which comes as a result of both large-scale structural changes and high-intensity individual transitions between firms, industries and occupations. However changes that accompanied this mobility didn’t always take the desired direction. Thus, workers shifts from formal sector of Russian labour market to the informal one significantly decrease labour productivity. Transitions between firms (e.g., external mobility) are much more pronounced in Russia than workers mobility within firms (internal mobility). However the intensity of internal mobility in Russia is very similar to the countries with very mobile internal labour markets. One of the important results of the study is that labour mobility indeed results in significant wage increases. The studies presented also analyze the characteristics of executives’ rotation of Russian industrial enterprises and the process of control handover from owners to salaried managers. Results show that the fairly high turnover is present among leaders of the Russian industrial enterprises and vast majority of them still combine the functions of ownership and control. The probability of heads rotation is higher for the companies with large investments in fixed capital as well as in research and development. A one-time change of executives rather promotes economic efficiency, while series of changes lead to its reduction. It appears that Russian enterprises’ development goes the worst possible scenario when firm’s economic success leads to the “directors mess” which then results in the reduction of productivity. Present report also highlights the issue of correct tenure estimation. The indicator of tenure provides the core information on the stability of individual’s employment at the given firm. Research presented revealed and classified major measurement problems that contribute to the significant bias in any tenure-related estimation on the RLMS-HSE data that should be carefully taken into account. Present report also covers the factors of individuals wage increase in the period of economic growth in 2003-2008. Main results are in the accordance with earlier studies on the topic which demonstrated large wage premium associated with labour mobility. Mobility on the Russian labour market in a period analyzed led to the improvement of matching between workers and jobs so that individuals could find better application of their abilities and skills. Present report also contributes to the analysis of individuals‘ self-perception trajectories which are quite relevant in the periods of successive economic upturns and recessions. Research revealed that individuals’ self-perceptions were highly dynamic in spite of the fact that the mean values of Russian population’s subjective indicators were rather stable over time. One of the important findings of the study is related to the identification of a group of people which demonstrated the most significant increase in self-evaluations in 2000-2014. It was comprised of individuals who perceived themselves as most deprived categories. Thus, it appears that the disadvantaged categories of Russian population were the primary beneficiaries of economic and social reforms in a given period. Final chapter of the present report is dedicated to the analysis of labour market institutions influence on the reallocation processes in a cross-country perspective. Rigid employment protection legislation, competition restrictions imposed by law and bureaucratic procedures that hinder competition are found to be main institutional factors that constrain labour mobility. 

Implementation of the research results

Results presented in the report can be used in social and economic policy recommendations. They also can have a number of important consequences for the evolution of modern labour market theory and methodology. Results presented in a present report provide new empirical results that contribute to the understanding of the contemporary features of Russian labour market mechanisms. Main results and the methodology of empirical studies described in the report can also be used in the labour economics courses.



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