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Elasticity of labour substitution for CGE, DSGE models given the Russian labour market rigidity
The post-pandemic inflation rise globally and in individual countries particularly highlighted the importance of revisiting the issue of labour market rigidity. Conventionally, unemployment rate, mean wages’ pattern, ratio of number of job offers to the number of job seekers form a typical list of indicators to monitor labour market rigidity. At the same time, general equilibrium macroeconomic modelling encompasses the possibility of labour substitution in-between industries at least. However, such substitution is often limited to a single value. Moreover, regional or job-specific substitution effects are mostly omitted due to the complexity of extracting and modelling respective parameters. The typical solution to such model simplification was to consider a set of expert-based substitution parameter values. Here we rediscover the datasource on job postings which yields us a unique opportunity to deeply consider the interrelationships of labour across different industries, including the cross-substitution effects. Moreover, we provide calibration for the elasticity of substitution subject to geographical, industrial and skills’ differences. Our principal claim is that it is worth considering as the common constant elasticity of substitution (CES) parameter of labour substitution elasticity in-between professions in Russia.