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How Late to Pay? Understanding Wage Arrears in Russia

Author

Listed:
  • John S. Earle

    (W.E. Upjohn Institute for Employment Research and Central European University)

  • Klara Z. Sabirianova

    (William Davidson Institute, University of Michigan Business School and Ural State University)

Abstract

We organize an empirical analysis of Russian wage arrears around hypotheses concerning factors that create incentives for firms to pay late and for workers to tolerate late payment, both reinforced by a prevalent environment of overdue wages. Our analysis draws upon nationally representative household panel data matched with employer data to show substantial interfirm variation with the probability of arrears positively related to firm age, size, state ownership, and declining performance. Estimation of a constrained multinomial logit model also reveals intrafirm variation related to job tenure and small shareholdings in the firm. Workers tend to have higher arrears in rural regions with low hiring rates, concentrated labor markets, and more prevalent arrears in the past. We argue that wage arrears, unlike wage cuts, have a theoretically ambiguous effect on workers' quit behavior, and we show empirically that the effect varies negatively with the extent of the practice in the local labor market.

Suggested Citation

  • John S. Earle & Klara Z. Sabirianova, 2002. "How Late to Pay? Understanding Wage Arrears in Russia," Upjohn Working Papers 02-77, W.E. Upjohn Institute for Employment Research.
    • Handle: RePEc:upj:weupjo:02-77
    Note: A revised version of this paper appears in the Journal of Labor Economics, Vol. 20, No. 3 (July 2002). See http://ideas.repec.org/a/ucp/jlabec/v20y2002i3p661-660.html. Please cite this revised version.
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    References listed on IDEAS

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    More about this item

    Keywords

    Russia; pay; arrears; Earle; Sabirianova; Upjohn;
    All these keywords.

    JEL classification:

    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • J4 - Labor and Demographic Economics - - Particular Labor Markets
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • P3 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions

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