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Regular version of the site

Book chapter

Compensating Wage Differentials Across Russian Regions

P. 65-105.

In this chapter, we provide evidence on compensating differentials in the labour market from the largest transition economy, Russia. Using the NOBUS micro-data and a methodology based on the estimation of the wage equation augmented by aggregate regional characteristics, we show that wage differentials across Russian regions have a compensative nature. Russian workers receive wage compensations for living in regions with a higher price level and worse non-pecuniary characteristics, such as a relatively low life expectancy, a high level of air pollution, poor medical services, a colder climate and a higher unemployment level. These compensations are not associated with the existing government system of compensating wage coefficients. After adjusting for regional amenities and disamenities, regional wages become positively correlated with interregional migration flows. According to our estimates, wage compensations along with differences in employment composition are able to account for about three fourths of the observed variation in wages across Russia regions.

In book

Compensating Wage Differentials Across Russian Regions
Edited by: C. Mussida, F. Pastore. Bk. Geographical Labor Market Imbalances . Iss. AIEL Series in Labour Economics. Berlin: Springer, 2015.