Market and home production earnings gaps in Russia

Abstract

This study assesses the evolution of earnings across different groups of workers during Russia's 2000–2013 oil boom and amidst the 2014–2015 oil bust and a trade war. Unconditional quantile regressions and growth incidence curves are applied to nine household surveys for 2000–2016 to estimate earnings gaps across urban/rural, farming/non-farming and gender divides at various earnings quantiles. Gaps in pre-fiscal formal labor market earnings and informal non-market home production are assessed, distinguishing the roles of workers' endowments differentials and returns differentials in production markets. Earning gaps are found to be pervasive, with rural and some female-headed households receiving lower returns on their human capital in part because they lack employment opportunities. Rural Russian households face mobility barriers and lack decent employment opportunities, thus lacking incentives for skill investment. Rural households tend to be less educated and face low returns on their various marketable characteristics. Gender gaps were particularly high historically, particularly among lower quantile groups, but have been steadily falling over the past decade. Growth incidence curves reveal that the 2014 shocks affected particularly harshly the farming and urban households, both immediately and over the following years. We conclude that Russia should strengthen its rural assistance programs and lower the mobility and resettlement barriers to improve rural households' access to education and employment.

Keywords

• wage gap decomposition
• unconditional quantile regression
• home production
• russian federation
• trade restrictions