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

Guido Friebel () and Sergei Guriev

No 283, William Davidson Institute Working Papers Series from William Davidson Institute at the University of Michigan

Abstract: We relate the phenomena of sluggish interregional labour reallocation, in-kind compensation, and wage arrears in Russia to 'attachment' strategies of firms: being paid in non-monetary forms makes it hard for workers to raise the cash needed for quitting the region. Attachment may facilitate relation-specific investments, but it may also be used to exploit workers because it eliminates workers' outside options. We show that exploitation does not only happen if regional labour markets are monoposonistic. 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 have 19% lower probability to move than workers who do receive their wages in cash.

Pages: pages
Date: 1999-10-01
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Related works:
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 (2000)
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