Non-Wage Benefits, Costs of Turnover, and Labor Attachment: Evidence from Russian Firms
Bank of Finland Institute for Economies in Transition Working Paper No. 4/2006
31 Pages Posted: 19 Apr 2006
Date Written: April 13, 2006
Just as in established market economies, many Russian firms provide non-wage benefits such as housing, medical care or day care to their employees. Interpreting this as a strategic choice of firms in an imperfect labor market, this paper examines unique survey data for 404 large and medium-size industrial establishments from 40 Russian regions. We find strong evidence that Russian industrial firms use social services to reduce the costs of labor turnover in the face of tight labor markets. The strongest effect is observed for blue-collar workers. We also find that the share of non-monetary compensation decreases with improved access to local social services.
Keywords: non-wage benefits, labor turnover, labor attachment, Russia
JEL Classification: J32, J33, J42, J63, M52, P31
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