Guriev: The paper stems from our work at the Russian
European Center for Economic Policy (RECEP) in 1998–2000. Together with a team
of young economists and experienced researchers from the EU, we did research and
provided policy advice on labor and social issues for the Russian government. We
were stunned by the low interregional mobility of Russian workers. Indeed, it is
a mystery that given the huge differentials in wages and unemployment rates,
mobility is so low. Partially, this may be due to administrative barriers to
mobility, like the infamous propiska (city passport) system, but it does
not explain the magnitude of the problem.
Friebel: The problem of low interregional mobility is
important, since structural changes require substantial worker mobility. We
found it interesting that low mobility coincides with the massive demonetization
of wages. Enterprises have accumulated huge wage arrears; they pay wages in kind
and through fringe benefits, ranging from kindergartens to housing, although the
government promised to transfer social assets to municipalities.
Guriev: At some point, we saw a link between these two
features of the Russian labor market. Our main point is that low mobility may
actually be a result of firms’ strategies to "attach" workers to
regions. Workers who are paid in nonmonetary ways find it harder to move. We
also show that these strategies can prevail only if the local labor market is
not too competitive. In other words, labor market competition can protect
workers against the risk of being "attached."
Friebel: It should be noted that firms may have an interest
in attaching workers for a very simple reason: workers who cannot move have less
bargaining power and can thus be hired at lower costs. So, in general, we should
expect that less mobile workers are worse off.
Q. What was the context for the collaboration between you? And
what was the role of your home institutions and the links between them?
Guriev: The collaboration worked very well. We worked
together both via email and by visiting each other for a few days. Actually, our
joint work has grown into a personal friendship. Our home institutions were very
helpful in this work. We were both part-time faculty at RECEP. Now the Center
for Economic and Financial Research (CEFIR) provides an excellent platform for
such policy-relevant research in economics. Our full-time employers [the New
Economic School in Moscow for Guirev and the Stockholm School of Economics for
Friebel] encouraged us to work together and provided all the support needed.
Q. Are you conducting any further research in the area? How is
this area of research evolving?
Friebel: We are going to do more work in this field. We now
believe we have an analytical framework that can be used to better understand
unregulated labor markets in other countries and comparable situations in
history.
Guriev: Russia is a great testing ground for a theory that
argues that firms may use strategies to make their workers immobile and
dependent. One of the largest structural changes in history is taking place
there, and understanding geographical labor mobility is both interesting and
important. But even in Western countries, firms have used attachment strategies,
such as company housing and company stores.
Q.: What have been the most problematic aspects of this
investigation?
Friebel: Even in OECD countries, relatively little is known
about geographical labor mobility in general and worker attachment in
particular. The data are scarce. This makes the work both difficult and
exciting. It would be wonderful to have better data on mobility and firms’
policies. We have just started taking steps to generate such data.
Guido Friebel is assistant professor of economics at SITE,
Stockholm School of Economics, affiliate of the Center for Economic and Policy
Research (CEPR), and affiliate of the Center for Economic and Financial Research
(CEFIR). Sergei Guriev is assistant professor at the New Economic School and
CEFIR, and affiliate of CEPR.
