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Labour Market Position of Workers of Various Age Groups and Enterprise Policies

Priority areas of development: economics
2019
The project has been carried out as part of the HSE Program of Fundamental Studies.

The aim of the research is to identify and to estimate the impact of actual and predicted changes in the age structure of the population and the enterprises policy on the operation of the Russian labour market.

The objects of study are various age groups of the population and Russian enterprises.

Methods

The empirical analysis is conducted using modern econometric methods and models, including modified probit models, systems of simultaneous equations, fixed and random effects models, instrumental variables.

The empirical basis of the research

The following datasets are used as the empirical basis for the research: The Interaction of Internal and External Labour Markets survey (IIELM), RLMS HSE, Rosstat, Monitoring of education markets and organizations (MEMO.

Results

The findings of the research follow two basic directions. The first one unites the results obtained from the analysis of various age groups in the labour market. The position and employment status of elderly population was estimated, the impact of the employment of seniors on their life satisfaction was analyzed. The study also determined the factors of youth unemployment and estimated the impact of personal characteristics on the probability of employment. Finally, the research assessed the return to noncognitive characteristics under automatization processes in production.

The findings suggest that high level of education and good health, together with living in a regional center increase the probability of employment in the Russian labour market. Moreover, being employed has positive and significant impact on the level of life satisfaction among seniors.

It is also found that low level education increases the probability of unemployment among all age groups. The probability of unemployment also goes up as the individual financial situation heads in the opposite direction. However, both probability and determinants of unemployment may differ among men and women.

Noncognitive characteristics (conscientiousness, openness, neuroticism, agreeableness, extraversion) influence the probability of unemployment among various socio-demographic and professional groups. They also appear to be notable determinants of wages. Neuroticism increases the probability of unemployment and is negatively linked to individual wages. In contrast, conscientiousness reduces the chances of being unemployed. Also agreeableness has negative impact on women’s wages.

The second direction of the research is related to the enterprises policies in terms of wages and employment. The Russian model of labour market is characterized by high sensitivity of wages to macroeconomic shocks. As a result of the analysis, some quantitative estimates for wage cyclicity in the Russian labour market were received. Moreover, the mechanism of wage adjustment in Russian firms was discussed as a further development of wage flexibility agenda.

Technological changes result in the expansion of unconventional forms of employment (including remote, part-time and non-permanent employment). The effectiveness of permanent employment in Russian enterprises was analyzed alongside its coverage and consequences.

The results suggest that wage flexibility in Russia is higher compared to the majority of other developed countries. The highest wage flexibility is observed among workers with high level of mobility and those employed in informal economy.

It is also revealed that wage adjustment is performed by 70% of Russian manufacturing firms. The main factor which has a positive impact on the probability of wage adjustments is financial success of the enterprise. Also those firms that represent the head of some holding together foreign firms tend to adjust wages more often compared to other types of firms.

Our research indicates that Russian enterprises are currently experiencing a rise in non-permanent employment. However, non-permanent employment does not guarantee any increase in the level of labour productivity. Rather, fixed-term contracts and contingent labour have negative influence on labour productivity. Labour productivity can only rise due to fixed contracts up to a certain level. After the optimal level is surpassed, the probability of the productivity growth gradually decreases. Similarly, as the share of contingent labour goes up, the probability of the labour productivity growth drops.

Further implication of the results

The findings of the research are either published or forthcoming in scientific journals: (4 articles, 0 preprints), discussed in research workshops and conferences in Russian and abroad. They are used as study materials in the educational process: in lectures for Labour Economics and Personnel Economics courses and research seminar “Human capital and public economics”.

The results can be used when designing action in economic and social policy in terms of increasing labour market involvement of various age groups. They can also be relevant for The Russian Ministry of Labour and Social Protection for estimating the factors for the reduction of youth unemployment. They can also be used for developing further strategy of active ageing and increasing the employment among seniors. It is recommended to widen training opportunities for low-skilled senior labour force for them to receive additional professional competences, including computer technologies, foreign languages, remote means of communication and entrepreneurship.

The results can also be used by the Russian Ministry of Education when designing action in the area of skill development among youth, which could positively affect the probability of employment and increase their wage income.

The results concerning enterprises can be used by the Russian Ministry of Industry and Trade and The Russian Ministry of Economic Development for designing economic policies in the era of economic digitalization. This research provides a solid basis for developing policies, which can potentially increase the competitiveness of Russian enterprises in terms of the effective usage of human resources. The results can also be used for developing a model of flexible employment in the framework of digitalization. Finally, the results may be useful for developing wage policies on micro and macro levels.

Publications:


Kudryashova A., Solntsev Sergey. Profitability and Executive Board Turnover in Russian Banks // Journal of Corporate Finance Research. 2019. Vol. 13. No. 2. P. 50-65. doi
Ляшок В. Ю., Лопатина М. В. Гибкость заработных плат в России: что показывают микроданные? // Экономическая политика. 2019. Т. 14. № 4. С. 96-119. doi