Do Wages Grow with Experience? Deciphering the Russian Puzzle

Eugenia Chernina and Vladimir Gimpelson ()
Additional contact information
Vladimir Gimpelson: University of Wisconsin-Madison

No 15068, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: The study explores how wages grow with experience in the Russian Federation. In all available cross-sectional data, the trajectory of the observed wage–experience profile is flat, peaks early, and declines sharply afterwards. This shape looks puzzling since it differs starkly from that observed in both developed and developing countries. We show that a proper interpretation of the wage–experience profile is hindered by the APC problem, when the effects of time, cohort, and experience are mixed. Our study uses data from the RLMS-HSE household survey covering the years 2000-2019. Relying on human capital theory, we apply a procedure suggested by Heckman et al. (1998) and advanced in Lagakos et al. (2018) to disentangle the APC effects. With certain assumptions concerning human capital depreciation due to aging, our results show that Russian wages do grow monotonically with experience. However, this growth is partially offset by the cohort effect that that proceeds in the opposite direction, thus reflecting massive depreciation of the human capital of workers from older cohorts. Meanwhile, the time effect mirrors the general GDP path as well as all booms and busts over the period.

Keywords: experience; wages; the human capital; wage–experience profile; Russia (search for similar items in EconPapers)
JEL-codes: J24 J31 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2022-02
New Economics Papers: this item is included in nep-cis and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published - published in: Journal of Comparative Economics, 2023, 51 (2), 545-563

Downloads: (external link)
https://docs.iza.org/dp15068.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp15068

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().