Minimum Wage and the Subsistence Level in the Russian Economy: Theoretical and Empirical Analysis of the Main Trends

Abstract

The paper studies the relationship between the minimum wage and the subsistence level in the Russian economy. In particular, we analyze the degree of elaboration of the issue and reveal its aspects that are studied most extensively, less extensively and those aspects that remain debatable. We use a methodology of normative-positive analysis and reveal a causal relationship, according to which the subsistence level should determine the consumer basket and the minimum wage, respectively. However, as we note in our paper, in the current economic practice the specified relationship has the opposite direction as well. We consider the main trends in the change of the subsistence level, the consumption basket and the minimum wage at the level of the Russian economy and conclude that their nominal and legally established equality does not promote real simple reproduction of labor force in certain regions. Moreover, the data obtained in the course of empirical analysis show that there is a differentiation in the level of wages between the regions of one type of activity. Scientific novelty of our study consists in the fact that it considers the complete cycle of circulation of the commodity form of the simple labor force, including the receipt of the advanced minimum wage, the minimum disposable income, and the subsistence level. The data on Russia obtained during the analysis show that the minimum wage remains behind the real subsistence level; such a situation impedes the creation of conditions for the simple reproduction of labor force. The results we have obtained can be used to develop regulations at the federal and regional levels, to develop target programs to support rural areas and to study the correlation between the subsistence level and the minimum wage differentiated by sector, region and level of professional training of employees

Keywords

• wages
• labor costs
• subsistence level
• labor remuneration
• measure of labor remuneration
• minimum wage
• policy on the minimum wage