Lobbying at the Local Level: Social Assets in Russian Firms

Bank of Finland Institute for Economies in Transition Working Paper No. 1/2006

34 Pages Posted: 19 Apr 2006

See all articles by Tuuli Juurikkala

Tuuli Juurikkala

Bank of Finland

Olga Lazareva

National Research University Higher School of Economics

Date Written: April 13, 2006

Abstract

In the planned economy firms were made responsible for providing their workers with so-cial services, such as housing, day care and medical care. In the transforming Russia of the 1990s, social assets were to be transferred from industrial enterprises to the public sector. The law on divestment provided little more than general principles. Thus, for a period of several years, property rights concerning a major part of social assets, most notably hous-ing, were not properly defined, as transfer decisions were largely left to the local level players. Strikingly, the time when assets were divested varied considerably across firms. In this paper we utilize recent survey data from 404 medium and large industrial enterprises in 40 Russian regions and apply survival data analysis to explore the determinants of dives-titure timing. Our results show that in municipalities with higher shares of own revenues in their budget and thus weaker fiscal incentives, firms used their social assets as leverage to extract budget assistance and other forms of preferential treatment from local authorities. We also find evidence that less competitive firms were using social assets to cushion them-selves from product market competition. At the same time, we do not find any role for lo-cal labor market conditions in the divestment process.

Keywords: housing divestment, lobbying, firms, muncipalities, Russia

Suggested Citation

Juurikkala, Tuuli and Lazareva, Olga, Lobbying at the Local Level: Social Assets in Russian Firms (April 13, 2006). Bank of Finland Institute for Economies in Transition Working Paper No. 1/2006, Available at SSRN: https://ssrn.com/abstract=896908 or http://dx.doi.org/10.2139/ssrn.896908

Tuuli Juurikkala (Contact Author)

Bank of Finland ( email )

P.O. Box 160
FIN-00101 Helsinki
Finland

Olga Lazareva

National Research University Higher School of Economics ( email )

Myasnitskaya street, 20
Moscow, Moscow 119017
Russia

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