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Compensating Wage Differentials Across Russian Regions

Aleksey Oshchepkov ()

Chapter 4 in Geographical Labor Market Imbalances. Recent Explanations and Cures, 2015, pp 65-105 from AIEL - Associazione Italiana Economisti del Lavoro

Abstract: In this chapter, we provide evidence on compensating differentials in the labor market from the largest transition economy, Russia. Using the NOBUS micro-data and a methodology based on the estimation of the wage equation augmented by aggregate regional characteristics, we show that wage differentials across Russian regions have a compensative nature. Russian workers receive wage compensations for living in regions with a higher price level and worse nonpecuniary characteristics, such as a relatively low life expectancy, a high level of air pollution, poor medical services, a colder climate, and a higher unemployment level. These compensations are not associated with the existing government system of compensating wage coefficients. After adjusting for regional amenities and disamenities, regionalwages become positively correlated with interregionalmigration flows. According to our estimates, wage compensations along with differences in employment composition are able to account for about three-fourths of the observed variation in wages across Russian regions.

Keywords: Compensating differentials; Regional wages; Migration; Russia (search for similar items in EconPapers)
JEL-codes: J3 J6 P2 R2 (search for similar items in EconPapers)
Date: 2015
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