Determinants of wage inequality in modern Russia

DETERMINANTS OF WAGE INEQUALITY IN MODERN RUSSIA

Vyacheslav N. OVCHINNIKOV
Laboratory Assistant-Researcher, Assistant, Laboratory Assistant-Researcher, Center for Macroeconomic Research, Financial Research Institute of the Ministry of Finance of the Russian Federation, Moscow, Russia; Lobachevsky State University of Nizhni Novgorod – National Research University, Nizhni Novgorod, Russia

Marina Yu. MALKINA
Doct. Sci. (Econ.), Professor, Lobachevsky State University of Nizhni Novgorod – National Research University, Nizhni Novgorod, Russia

TERRA ECONOMICUS, 2019, Vol. 17 (no. 3),

p. 30-47
DOI: 10.23683/2073-6606-2019-17-3-30-47

The purpose of this study is to assess the contribution of various factors to the differentiation of the wage level of Russian citizens belonging to different income groups over time. The study is based on the data provided by two RLMS surveys by the Higher School of Economics for 2004 and 2017. To assess the contribution of factors to the wage level of the various quintile income groups of population in different periods, we used the construction of OLS and conditional and unconditional quantile regressions. Further, on the basis of the developed regressions using the methods of decomposition by R. Oaxaka and A. Blinder and unconditional quantile by S. Firpo, we evaluated the contribution of various factors to the wage differentiation of quantile groups of the Russian population for the two years under study. The study revealed that wage differentiation was primarily determined by the effect of market valuation, while the effect of the composition of the characteristics of the labor force had a much smaller impact on it. Salaries of urban and rural residents leveled off. The remuneration of representatives of the budget and agrarian sectors of the economy gradually approached the average level. Higher education added a lower wage premium. However, high-paid workers did not face this kind of devaluation of a higher education diploma. Finally, we found a tendency to increase the fine for belonging to the informal sector of the economy, although the number of such workers has hardly changed in recent years. The results can be useful when conducting a social policy aimed at reducing the income inequality of Russian citizens.

Citation: Ovchinnikov, V. N., and Malkina, M. Yu. (2019). Determinants of wage inequality in modern Russia. Terra Economicus, 17(3), 30–47. DOI: 10.23683/2073-6606- 2019-17-3-30-47

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Keywords: wage; differentiation; inequality; factor decomposition of income; regression; conditional and unconditional quantile

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Publisher: Southern Federal University
Founder: Southern Federal University
ISSN: 2073-6606