The Wage and Non-Wage Costs of Displacement: Evidence from Russia

Quaderni DSE Working Paper No. 734

56 Pages Posted: 9 Mar 2011

See all articles by Hartmut Lehmann

Hartmut Lehmann

University of Bologna - School of Economics, Management, and Statistics; IZA Institute of Labor Economics

Alexander Muravyev

Saint Petersburg Branch National Research University Higher School of Economics; Institute for the Study of Labor (IZA)

Tiziano Razzolini

University of Siena

Anzelika Zaiceva

University of Modena and Reggio Emilia; IZA Institute of Labor Economics

Date Written: March 8, 2011

Abstract

This paper is the first to analyze the costs of job loss in Russia, using unique new data from the Russian Longitudinal Monitoring Survey over the years 2003-2008, including a special supplement on displacement that was initiated by us. We employ fixed effects regression models and propensity score matching techniques in order to establish the causal effect of displacement for displaced individuals. The paper is innovative insofar as we investigate fringe and in-kind benefits and the propensity to have an informal employment relationship as well as a permanent contract as relevant labor market outcomes upon displacement. We also analyze monthly earnings, hourly wages, employment and hours worked, which are traditionally investigated in the literature. Compared to the control group of non-displaced workers (i.e. stayers and quitters), displaced individuals face a significant income loss following displacement, which is mainly due to the reduction in employment and hours worked. This effect is robust to the definition of displacement. The losses seem to be more pronounced and are especially large for older workers with labor market experience and human capital acquired in Soviet times and for workers with primary and secondary education. Workers displaced from state firms experience particularly large relative losses in the short run, while such losses for workers laid off from private firms are more persistent. Turning to the additional non-conventional labor market outcomes, there is a loss in terms of the number of fringe and in-kind benefits for reemployed individuals but not in terms of their value. There is also some evidence of an increased probability of working in informal jobs if displaced. These results point towards the importance of both firm-specific human capital and of obsolete skills obtained under the centrally planned economy as well as to a wider occurrence of job insecurity among displaced workers.

Keywords: Costs of job loss, worker displacement, propensity score matching, Russia

JEL Classification: J64, J65, P50

Suggested Citation

Lehmann, Hartmut F. and Muravyev, Alexander and Razzolini, Tiziano and Zaiceva, Anzelika, The Wage and Non-Wage Costs of Displacement: Evidence from Russia (March 8, 2011). Quaderni DSE Working Paper No. 734, Available at SSRN: https://ssrn.com/abstract=1781022 or http://dx.doi.org/10.2139/ssrn.1781022

Hartmut F. Lehmann (Contact Author)

University of Bologna - School of Economics, Management, and Statistics ( email )

Piazza Scaravilli 1
40126 Bologna, fc 47100
Italy

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Alexander Muravyev

Saint Petersburg Branch National Research University Higher School of Economics ( email )

Kantemirovskaya str. 3a
St. Petersburg, 194000
Russia

HOME PAGE: http://https://www.hse.ru/en/org/persons/127811036

Institute for the Study of Labor (IZA) ( email )

Schaumburg-Lippe-Str. 5-9
Bonn, D-53113
Germany

HOME PAGE: http://www.iza.org/en/webcontent/index_html

Tiziano Razzolini

University of Siena ( email )

Via Banchi di Sotto, 55
Siena, 53100
Italy
+393493277244 (Phone)

Anzelika Zaiceva

University of Modena and Reggio Emilia ( email )

Viale A. Allegri 9
Modena, Modena 42121
Italy

IZA Institute of Labor Economics ( email )

Schaumburg-Lippe-Str. 7 / 9
Bonn, D-53072
Germany

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