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The behavior of enterprises in the labor market. The labor market of graduates

Priority areas of development: economics
2016
The project has been carried out as part of the HSE Program of Fundamental Studies.

Goal of research:

  1. The determination of behavioral patterns of Russian enterprises by evaluating factors of their innovative activity, recruitment of employees, non-standard contracts and use of immigrant labor.
  2. To determine factors of choice of educational and career strategies of students and graduates of Russian universities and evaluation of the main labor market outcomes of this choice in terms of graduates’ wages and employment.

The realization of the goal of research was carried out through the following directions:

  • The analysis of the impact of non-standard contracts on innovation activity of enterprises
  • Identification of the main determinants of strategies used by enterprises for search and recruitment of employees
  • Evaluating the interrelation between sectoral and professional segregation  of natives and immigrants in the labor market
  • Identification of the determinants of wage differentiation among immigrants and differentiation of characteristics of their employment
  • The analysis of the impact of academic achievement on wages of Russian university graduates
  • The analysis of the impact of university quality on labor market outcomes of Russian university graduates
  • Carrying out of the next wave of monitoring of enterprises, started in 2009

Methodology:

Empirical analysis was carried out through using of different econometric methods and models, including different modifications of logistic and probit regression, two-stage least squares analysis, fixed and random effects models. For sectoral segregation evaluation we used Duncan index. Earnings differentials between natives and immigrants were evaluated using Oaxaca-Blinder decomposition and Brown decomposition.

Empirical base of research:

  1. Enterprise survey «Interaction of internal and external labor markers» (2014-2015) that represents Russian enterprises,
  2. Russian Longitudinal Monitoring Survey of Higher School of Economics and data of Federal State Statistics Service (2002-2013),
  3. HSE CIR Monitoring of HSE graduates (2014).

Results of research:

The level of innovative activity of Russian enterprises is low comparing to developed countries.  At the same time the share of fixed-term employment contracts remains on high level and exceeds the level of a range of European countries. The results of conducted analysis show that enterprises using fixed-term contracts are more likely to be innovative. However, the growth of number of workers employed on the basis of fixed-term contracts decrease the probability of innovative activity of enterprises. The highest probability of innovation activity is achieved if the share of fixed-term contracts at the enterprise comprises about 5% of employees.

As a part of the study of enterprise policy in the sphere of search and recruitment of employees we obtained results, indicating that the most popular channels of employees search in Russia are the Internet and social ties. The more diverse channels of employee’s search are used by large innovative enterprises. State-owned enterprises are more likely to use the state employment service for recruitment, while international companies or enterprises with foreign capital prefer using the media and recruitment companies. Perfect financial situation of enterprises decline the number of recruitment channels used by firms.

According to the results of our study, the use of the Internet significantly increases chances to find a job. Job search through the Internet is more common for workers with higher and secondary education, living in Moscow, Saint-Petersburg and regional centers. Among the enterprises the Internet is commonly used by private Russian companies, working in retail and financial services. These companies are located in large and medium-sized cities having higher salaries and stable financial situation. Moreover, it was determined that the Internet is increasingly used by businesses to find professionals than workers and managers.

While studying the situation of immigrant workers (foreign born) from the former Soviet republics in the Russian labor market and patterns of their employment by local enterprises, we discovered that employed immigrants are significantly differ from natives in socio-demographic characteristics. They are much younger than natives and have less children comparing with natives. They often settle in the Central regions of Russia and big cities (Moscow, St.Petersburg).  Among immigrants, as well as among the natives the majority of workers have secondary education. In contrast, immigrants less likely than natives have higher education.

Two analyzed group of workers differ by job characteristics. The results of evaluation of the professional and sectoral segregation for immigrants and natives shows the tendency of convergence, as a result, sectoral and professional differences between considered groups diminishes. It was also found that wages of ethnically non-Russian individuals with an immigration background are 13% lower than wages of native workers. However, only 4.5% of wage differentiation between ethnically non-Russian individuals with an immigration background and native workers can be explained by observed characteristics, while 95.5% is unexplained.

We also proved the hypothesis about the impact of sector allocation on income differentiation between natives and ethnically non-Russian individuals with an immigration background. If ethnically non-Russian individuals will be employed in the same sectors of economy as local workers, the income differentiation between these groups would have increased from 13% to 27%.

The second part of research was devoted to the impact of academic performance on wages of Russian university graduates. The study shows that there is no interconnection between academic achievement and future wages of university graduates.  From one point of view, one of the possible explanations of low correlation between academic achievement and wages lies in fact, that system of higher education and labor market can differ in their evaluation of abilities and skills. For instance, higher education system values educational abilities of students and their efforts, while it usually fails to evaluate personal qualities of students, their soft-skills (communication skills, team working, leadership, empathy and so on). While, formal knowledge acquired at university might be less valuable for employers, than personal qualities and soft skills of employees. As a result, many employers provide different tests, job interviews to choose the best candidate for the position. The other explanation of insignificant or even negative impact of academic performance on wages of university graduates is connected with a raw orientation of the Russian economy and the underdeveloped sector of the knowledge-based economy that leads to low demand for formal knowledge. It was found, that relative value of different elements of human capital, such as formal knowledge, work experience and soft-skills varies depending on the sector of employment, industry and position. 

Level of implementation, recommendations on implementation or outcomes of the implementation of the results

The results of the project were published in different academic journals and preprint series (5 papers and 5 preprints), were discussed at seminars and conferences in Russia and foreign countries. The results of the project are also used in educational process in the preparation of teaching aids, manuals and lectures on labor and personnel economics.

The study findings have significant policy implications for the Ministry of Industry and Trade of the Russian Federation and the Ministry of Economic development for the formulation of the measures to stimulate innovative activity of enterprises, development of real sector of the economy due to efficient allocation of labor force including immigrant labor force and flexibility of work.

The results of the study have also significant implications for formation of economic and social policy. Study findings are relevant for Ministry of Labor and Social Protection of the Russian Federation in fields of employment and labor relations. Results of the project are particularly important for the development of measures for improvement of the conditions of employment of immigrant labor force, coping with unemployment and facilitation of recruitment for enterprises.

The research findings have significant implications for reforms in education in the context of their consequences for enterprises and in terms of employment and wages of university graduates in the labor market. In particular, Ministry of Education while formulating educational policy may take into consideration the necessity of formulation of educational programs and competences in terms of labor market demand for skills in condition of modernization of economy. Moreover, the Ministry of Economic Development of the Russian Federation may develop requirements directed to technical advancement of jobs that will stimulate innovative activity of Russian enterprises and create demand for high-skilled labor. 

Publications:


Пентюк А. Р., Солнцев С. А. Корпоративное управление в российских компаниях: финансовые факторы смены руководителей // Проблемы теории и практики управления. 2016. № 1. С. 117-125.
Rudakov V., Figueiredo H., Teixeira P., Roshchin S. The Impact of Horizontal Job-Education Mismatches on the Earnings of Recent University Graduates in Russia / Institute for the Study of Labor. Series IZA DP "Discussion Paper". 2019. No. 12407.
Ляшок В. Ю., Рощин С. Ю. Молодые и пожилые работники на российском рынке труда: субституты или нет? / НИУ ВШЭ. Серия WP15 "Научные труды Лаборатории исследований рынка труда". 2016. № 04.
Полякова Е. Ю., Смирных Л. И. Положение лиц с иностранным происхождением на российском рынке труда (РМЭЗ НИУ ВШЭ, 2009–2012) / НИУ ВШЭ. Серия WP15 "Научные труды Лаборатории исследований рынка труда". 2016.
Рудаков В. Н., Чириков И. С., Рощин С. Ю., Дрожжина Д. С. Учись, студент? Влияние успеваемости в вузе на заработную плату выпускников. / НИУ ВШЭ. Серия WP15 "Научные труды Лаборатории исследований рынка труда". 2016. № 1.
Travkin P., Sharunina A. The returns to training in Russia: a difference-in-differences analysis // International Journal of Training and Development. 2016. Vol. 20. No. 4. P. 262-279. doi
Smirnykh L. I., Woergoetter A. The importance of institutional and organizational characteristics for the use of fixed-term and agency work contracts in Russia / University of Technology, Vienna. Series Economics "Econ WPS". 2016. No. 9.
Рощин С. Ю., Солнцев С. А., Васильев Д. С. Эволюция технологий поиска работы на рынке труда в интернет-эпоху / НИУ ВШЭ. Серия WP15 "Научные труды Лаборатории исследований рынка труда". 2016. № 2.
Смирных Л. И. Временная (непостоянная) занятость // В кн.: Российский рынок труда: тенденции, институты, структурные изменения / Под общ. ред.: В. Е. Гимпельсон, Р. И. Капелюшников, С. Ю. Рощин. М. : Центр стратегических разработок, 2017. Гл. 8. С. 80-91.
Smirnykh L. I. Is Flexible Labor Good for Innovation? Evidence from Russian Firm-level Data // Foresight and STI Governance. 2016. No. 4. P. 60-70. doi