The Reallocation of Workers and Jobs in Russian Industry:
New Evidence on Measures and Determinants
Upjohn Institute Working Paper 02-83
J. David Brown
Heriot Watt University
John S. Earle, Senior Economist
W.E. Upjohn Institute for Employment Research
Central European University
JEL Classification Codes: E24, J23, J63, P23, P31
Gross job and worker flows in Russian industry are studied using panel data from a recent
survey of 530 firms selected through national probability sampling. The data permit an
examination of several important measurement issues-including the timing and definition
of employment, the roles of split-ups and mergers, and the relative magnitudes of rehiring
and new hiring and of quits and layoffs-and they contain a rich set of firm characteristics
that may affect job and worker turnover. The results imply that job destruction and worker
separation rates in industrial firms rose in the early 1990s, as did job flows as a fraction
of worker flows and layoffs as a fraction of separations. By contrast, job creation and
worker hiring rates were flat until 1999, the former low and the latter surprisingly high.
Heterogeneity in individual firm behavior increased throughout. New firms and old enterprises
that have been reorganized display much larger flows compared with unreorganized enterprises.
Unions appear to reduce worker flows, but the structure of neither product nor labor markets
shows a significant impact. Private ownership has ambiguous effects: insider ownership,
particularly by managers, is associated with higher worker flows and excess job reallocation,
while outsider ownership, particularly by blockholders, is associated with lower flow rates.
A measure of adjustment costs constructed from the worktime necessary to hire and train a new
employee is strongly related to variables usually associated with adjustment costs, including
worker wage, education, firm size, capital intensity, and labor productivity, but only weakly
to job and worker turnover. Little evidence is found that firms' employment adjustments have
become more sensitive to adjustment costs during the transition, but worker and manager
ownership are associated with more sensitivity than are other types of ownership.
NOTE: A revised version of this paper was published in Economics of Transition, Vol. 11, No. 2 (June 2003), pp. 221-252.
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