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Compensating Wage Differentials Across Russian Regions

Aleksey Oshchepkov

Chapter Chapter 4 in Geographical Labor Market Imbalances, 2015, pp 65-105 from Springer

Abstract: 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, regional wages become positively correlated with interregional migration 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)
Date: 2015
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DOI: 10.1007/978-3-642-55203-8_4

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