Staying Longer on Unemployment Register in Russia: Lack of Education, Bad Luck or Something Else?

Using individual-level data on registered unemployed collected by the Federal Employment Service in Voronezh province of Russia (1996-2000), we test some basic hypotheses on the influence of individual attributes (gender and education, in particular), working history, the specifics of the regulatory framework, and regional labor market characteristics on the hazard ratios, and hence, on duration of unemployment. We obtain empirical support for gender and educational differentials in unemployment duration: women tend to stay longer in the pool, and there are gender asymmetries in the influence of employment history on unemployment duration; those with junior professional education have significantly higher exit rates from unemployment as compared with those with general secondary education, while secondary professional and university degrees do not help you leave unemployment. There appears to be a “premium” in terms of higher exit rate for males with experience in private enterprise, but not for females, while the configuration of the local labor market does matter for both: those living in municipalities with highly concentrated labor markets tend to have longer unemployment spells. We find positive duration dependence, with the relevant coefficient in Weibull specification being around 1.8. The result could be driven by the increasing with unemployment time liquidity constraint that reduces reservation wage significantly. Together with almost infinite downward wage flexibility in the Russian labor market, that implies that the demand for whatever job could arise at certain time and be met by the offers available in the labor market. Positive duration dependence seems to suggest that this liquidity constraint argument overweigh the influence of education, experience and other factors on reservation wage at some point in time.