Why Russian Workers Do Not Move: Attachment of Workers Through In-Kind Payments¤

Type Working Paper
Title Why Russian Workers Do Not Move: Attachment of Workers Through In-Kind Payments¤
Author(s)
Publication (Day/Month/Year) 1999
URL http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.195.2853&rep=rep1&type=pdf
Abstract
We relate the phenomena of sluggish interregional labour reallocation, in-kind compensation, and wage arrears in Russia to ‘attachment’ strategies of …rms: paying wages in non-monetary forms makes it hard for workers to raise the cash needed for quitting the region. Attachment may facilitate investments that do not pay o¤ if workers are expeced to leave the region. However, since it eliminates workers’ outside options, it may also be used to exploit them. Exploitation does not only occur in monoposonistic regional labour markets. Even if there is some competition, all …rms in a region may use attachment. Here, workers are locked-in and do not receive any compensation for their forgone option to move. Data of the Russian Longitudinal Monitoring Survey (RLMS) support our theory. Workers who receive in-kind payments have a 19% lower probability to move than workers who do receive their wages in cash.

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