Marshall and Labor Demand in Russia: Going Back to Basics

51 Pages Posted: 9 Oct 2001

See all articles by Jozef Konings

Jozef Konings

Catholic University of Leuven (KUL) - LICOS - Centrum voor Transitie-economie; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Hartmut Lehmann

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

Date Written: December 2001

Abstract

Using a unique data set of medium and large enterprises (MLEs), which covers four Russian regions and the three sectors manufacturing and mining, construction and trade and distribution, we estimate fixed effects specifications of static labor demand equations for the year 1997. The most important conclusion that can be drawn is that, even though labor demand is relatively inelastic in international perspective, six years into transition Russian MLEs are responsive to wage changes in their employment decisions. A second interesting finding shows that there are distinct differences in the behavior of state-owned enterprises, which exhibit a weaker wage employment trade-off than privatized and partially privatized firms. Looking at the entire sample and various sub-samples we also try to relate the estimated wage elasticities to the empirical evidence on three of Marshall's rules of derived demand. Our results show that investigating empirically these rules seems a promising avenue for establishing some of the driving forces, which are behind labor demand in Russia.

Keywords: Transition Economics, Demand for Labor

JEL Classification: J20, J23, M51, P31

Suggested Citation

Konings, Jozef and Lehmann, Hartmut F., Marshall and Labor Demand in Russia: Going Back to Basics (December 2001). IZA Discussion Paper No. 372; William Davidson Institute Working Paper No. 392a. Available at SSRN: https://ssrn.com/abstract=286601

Jozef Konings

Catholic University of Leuven (KUL) - LICOS - Centrum voor Transitie-economie ( email )

Waaistraat 6 - box 3511
Leuven, 3000
Belgium
+32 16 326 589 (Phone)
+32 16 326 599 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

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

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

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