Are Interregional Wage Differentials in Russia Compensative?

Interregional differentials in nominal wages in the Russian Federation are huge compared to other countries. Using the NOBUS micro-data and a methodology based on the estimation of the wage equation augmented by aggregate regional characteristics, we show that these differentials have a compensative nature. Russian workers receive wage compensations for living in regions with a higher price level and worse non-pecuniary characteristics, such as a relatively low life expectancy, a high level of air pollution, poor medical services and a colder climate. After adjusting for these regional characteristics, the relative ranking of regions in terms of average wages changes considerably. Moreover, regional nominal wages become positively correlated with interregional migration flows. According to our estimates, half of the interregional wage variation between workers with similar productive characteristics should be considered to be compensative. These results support the view that the best policy reaction to the current high interregional wage differentials should be the removal of migration barriers and a reduction in migration costs. In general, our results show that wage compensations for regional disamenities along with differences in employment composition are able to account for about three fourths of the observed interregional variation in wages

Explaining eastern Germany's wage gap : the impact of structural change

Since Eastern Germany's conversion to a market economy wages have remained considerably below the West German wage level. This article looks at the role of establishment-specific factors-such as sectoral affiliation and size of the labour force-in this process. A non-parametric decomposition that has played a prominent role in the gender wage gap literature is applied to breakdown the East-West wage gap into its constituent components. Using establishment data from German employment statistics, the article demonstrates that the catching-up process of Eastern Germany's wage level is hindered by the shift in its economic structure towards lower-paying types of companies, which has caused the lagging behind in the adjustment of wage

Production Outsourcing, Organizational Governance and Firm's Technological Performance: Evidence from Italy

Aim of this paper is to study whether and how the firm's decision to outsource production activities affects its technological performance. In particular, we look at how the alignment between the firm's gover¬nance strategy and the underlying attributes of the transactions affects the capacity of the firm to introduce new products and processes. Using microeconomic data on a panel of Italian manufacturing firms for the period 1998-2003; we develop a two-stage approach: first, we estimate the determinants of the firm's organizational governance (production outsourcing); second, we incorporate a measure of governance mis¬alignment into a technological performance relation. We find (i) that firms not aligned with the optimal organizational governance perform less well in terms of process innovation than more aligned competitors, but (ii) that misalignment has a positive effect on product innova¬tion. However, this counterintuitive result is strongly characterized by non-linear effects that reverse the latter correlation for high values of governance misfit