Why Russian Workers Do Not Move: Attachment Of Workers Through In-Kind Payments

Sergei Guriev and Guido Friebel ()

No 2368, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We relate the phenomena of sluggish interregional labour reallocation and inkind compensation in Russia to ‘attachment’ strategies of firms: paying wages in non-monetary forms makes it hard for workers to raise the cash needed for quitting their region in order to find better jobs in more prosperous regions. While attachment may facilitate worker-specific investments that do not pay off if workers are expected to leave, it also eliminates workers’ outside options. Hence, firms may use it to exploit workers. Surprisingly, exploitation through attachment does not only occur in monopsonistic regional labour markets. Even if there is some competition, all firms in a region may use attachment strategies. Here, workers are locked-in and do not receive any compensation for their forgone option to move. Data of the Russian Longitudinal Monitoring Survey (RLMS) support our theory. Workers who receive in-kind payments are less likely to move than workers who do receive their wages in cash.

Keywords: Transition; Labour mobility; Enterprise restructuring (search for similar items in EconPapers)
JEL-codes: B31 D23 J41 (search for similar items in EconPapers)
Date: 2000-01
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Citations: View citations in EconPapers (26)

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Working Paper: Why Russian Workers do not Move: Attachment of Workers through In-Kind Payments (2000)
Working Paper: Why Russian Workers Do Not Move: Attachment of Workers Through In-Kind Payments (1999)
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