Leaving state jobs in Russia

Testo completo

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(3) LeavingState J ob sinR ussia J arkko T urunen¤ Departm ent ofE c onom ic s,E uropeanU niversity Institute Via d ei R oc c ettini 9 ,50 0 16 SanDom enic o d i F iesole,Italy turunen@iue.it T hisversion2 0 .6. 2 000. A bstract I analyze the reallocation of labor and human capital from the state sector to the nonstate sector and nonemployment in R ussia.I use anationally representative household dataset,the R ussianL ongitudinalM onitoringSurvey,tostudysectoralmobility in twoperiods oftransition usingmultivariatediscretechoice models.T he results showthatsectoralmobility ofdi®erentskill groups varies.T hosewith universityeducation,with supervisory responsibility and in white-collar occupations are less likely to leave state jobs to both nonstate employment and nonemployment.T he results suggestthatthere may be mismatch ofskills across state/nonstateemploymentandthatnonstateemployment consists mostlyoflowskill,bad jobs. Keywords:labormobility,human capital,privatization. JEL classi¯cation:J4,J6,P 2. ¤. I thank A ndrea Ichino forsupervision and comments. A lso thanks to T homas B auer, G iulia Faggio, JenniferH unt, A lexandre Kolev, and participants ofthe EU I L aborL unch and the T hird IZ A SummerSchoolon L aborEconomics forcomments onearlierversions.R emainingerrors aremine.T hisresearchisfundedbytheFinnish A cademy..

(4) 1. In trod uc tion. O ne ofthe d ec isive f ac torsofsuc c essintransitionf rom planto m arket isthe realloc ationoflab or and humanc apitalf rom the state to the private sec tor.T he realloc ationoflab or d eterm inesgrow th ofthe new private sec tor.T he private sec tor requiresw orkersand their skills{ ed uc ated prof essionals, skilled mac hine-operators, asw ellasthose w ith a knac k f or ad apting to the new environm ent { inord er to grow and b e prod uc tive.T he realloc ationoflab or also d eterm inesec onom ic perf orm ance b oth d uring and af ter transition. During transition, the extent ofunemploym ent and ec onom ic c ostsassoc iated w ith it,suc h aslost inc om e, d eteriorating skillsand und eruse ofhumanresourc es, d epend on the nature ofthe realloc ationproc ess. Inthe long run, assum ing that the private sec tor ism ore e± c ient initsuse ofresourc es,the grow th potentialofthe ec onomy isd ec id ed b y the realloc ationofhum anc apitalto the private sec tor.Further, any hum anc apitalinherited f rom the plan ec onomy that isnot usef ulinthe new ec onomic environm ent c onstitutes lost investm ent. T he R ussianexperience inrealloc ationoflab or and hum anc apital is m ixed . T he apparently positive f eaturesinclud e f ast privatization, high job turnover and low unemploym ent.F irst,asa result ofthe m ass privatizationprogram ,the share ofprivate em ployment and prod uc tion increased rapid ly.Af ter onlythree yearsoftransitionin19 9 4 ,50 per c ent ofR ussianG DP w asprod uc ed b y private ¯rm s. Sec ond , job mob ility asm easured b y job turnover hasb eenrelatively high inR ussia d uring transition.R em arkab ly, up until19 9 6 nearly halfofalljob sinvolved a hire or a separationw ithina year (G impelsonand Lippold t,19 9 7).T hird , inc ontrast to other transitionec onom ies,the R ussianunem ploym ent rate rem ained b elow 10 per c ent d uringthe earlypart ofthe transition.T hese f eaturestogether w ith a d ow nw ard ad justm ent ofrealw ages,encouraged the O E CD to c onclud e that the °exib le R ussianlab or m arket w as"one ofthe m ost encouraging aspec ts ofec onom ic perf orm ance" inR ussia (p.14 3, O E CD, 19 9 5). T he negative f eatures oflab or realloc ationin R ussia includ e lab or hoard ing and poor output perf orm ance. R ussian 1.

(5) ¯rm shoard ed lab or inmasses.T he extent oflab or hoard ing isevid ent f rom c om paringoutput and employm ent grow th ¯guresb etw een19 9 2 and 19 9 5: w hile output f ellb y a totalof35.5 perc ent,em ploym ent d ec lined b y10 .5per c ent only.T he f allinoutput itselfhasb eenthe largest am ong the transitionec onom ies.Finally,a c loser lookat som e ofthe apparently positive f eaturessuggeststhat lab or market perf orm ance m ay have not b eenso encouraging af ter all. Inpartic ular, stud iesoflab or mob ility have f ound that job m ob ility islow er f or those w ith m ore ed uc ationand higher skills, suggesting that the realloc ationofsome typesofhum an c apitalmay have b eenslow (G impelsonand Lippold t,19 9 7,G rosf eld t et al.,19 9 9 and T urunen,2 0 0 0 ). Inthisstud y Ievaluate a partic ular aspec t ofrealloc ationoflab or and hum anc apitalinR ussia: the role ofskillsand humanc apitalinthe d ec isionto leave state job s.T he stud y c ontrib utesto existingknow led ge ofw orker m ob ility inR ussia inthree d irec tions. First, I evaluate lab or m ob ility over em ploym ent statesby ow nership versusm ovesb etw een em ploym ent and nonem ploym ent per se.Inpartic ular Istud y the d eterm inantsofleaving state job sto other employm ent states, i.e.nonstate em ploym ent and nonem ployment. T he f oc usonem ployment statesb y ow nership und erlinesthe im portance ofrealloc ationf rom the state to the private sec tor.Sec ond ,the em phasisonem ploym ent b yow nership allow s m e to ind irec tly evaluate the nature ofthe private sec tor. Ina rec ent stud y, G impelsonand Lippold t (19 9 9 ), evaluate private sec tor em ploym ent d irec tly using variousd ata sourc es. Asallstud iesofthe private sec tor inR ussia, their stud y su®ersf rom the d i± c ulty ofc onsistently m easuring private em ploym ent. T hird , Ic om pare the d eterm inantsof leavingstate job sintw o d i®erent tim e period sofR ussiantransition. Iuse a household d ata set, the R ussianLongitud inalM onitoring Survey (R LM S) to stud y mob ility b etw eenem ployment statesb y ow nership.T hree f eaturesofthe R LM S d ata are partic ularly valuab le f or the stud y: ¯rst,the d ata isnationally representative ofthe R ussianpopulation;sec ond ,the panelstruc ture ofthe d ata enab lesm e to c om pare lab or m ob ility over tim e;and third ,the d ata allow sf or a c onsistent d e¯nition of¯rm ow nership to state and nonstate.Iestim ate d isc rete choic e m od 2.

(6) elsto evaluate the c harac teristic softhose that leave state job sw ithina year.T he resultsshow those w ith higher ed uc ation,supervisory responsib ility or inw hite-c ollar oc c upationsare lesslikely to leave state job s. T he negative ed uc atione®ec t isstrongest f or those w ith university ed uc ation.T he d eterminantsofm ob ility c hange over time. Inad d ition, a large part ofthe negative e®ec t isd rivenb ythe struc ture ofprivatization that isb iased tow ard sb lue-c ollar em ploym ent. T he rest ofthe paper isorganized asf ollow s.Insec tion2 ,Ireview existing literature onlab or m ob ility and skills, and c om positionofthe private sec tor inR ussia.Insec tion3,Ipresent the R LM S d ata and the samplesused inthe analysis,asw ellasd e¯nitionsofem ploym ent states and skillproxies(a d etailed d isc ussionofm ethod ology isinclud ed inan Append ix).Insec tion4 ,Ipresent the resultsofthe stud y inthree sub sec tions: sample c harac teristic s, leaving state job susing a logit mod el, and leavingstate job sto nonstate em ploym ent or nonem ployment using a multinom iallogit mod el.Insec tion5,Id isc ussalternative interpretationsofthe results.F inally,Isum m arize the stud y insec tion6.. 2. Literature. T he stud iesofjob m ob ilityinR ussia are lim ited b yavailab le d ata sourc es. Asa result,most earlystud iesad opted a c ase stud yapproach or use f ragm ented sourc esofaggregate and c ross-sec tionald ata to evaluate mob ility. T hese early stud iespoint to a puzzlingc oexistence ofrelatively high lab or turnover and c ontinued lab or hoard ing inR ussia. Severalstud ies have c on¯rm ed that high turnover isanimportant f eature ofthe R ussian lab or m arket.U singo± c ialaggregate statistic s,G im pelsonand Lippold t report that lab or turnover w asb etw een4 6 to 50 per c ent b ef ore 19 9 6, slow ing d ow nto approximately 4 2 thereaf ter.Com parab le ¯guresf rom other transitionec onom iespoint to muc h sm aller turnover, b etw een32 to 4 2 per c ent (G impelsonand Lippold t,19 9 7).1 How ever,b ased onaggregate d ata,lab or hoard ingw asalso c om m on.B etw een19 9 2 and 19 9 5, 1. G impelson and L ippoldtstress thattheo±cialstatistics arelikely tounderstate the extentoflaborturnoverin R ussia, mainly because ofthe exclusion ofsmallen-. 3.

(7) the tim e period ofthisstud y,output f ellb y a totalof35.5 perc ent w hile em ploym ent d ec lined b y 10 . 5 per c ent.T he d i®erence b etw eend ec lines inoutput and em ployment suggeststhat a large employm ent overhang persisted d uring the transition.Variousexplanationsf or thisextensive lab or hoard ing have b eensuggested inthe literature. T hese explanationsinclud e the struc ture ofd ec isionmakingw ithin¯rm s,technologic al c onstraints, variousinstitutionalf ac torsofthe lab or m arket and soc ioc ulturalf ac tors(f or a d isc ussion,see Comm and er et al.artic lesinW orld B ank,19 9 5,M etalina,19 9 6and Stand ing,19 9 6). T he c oexistence ofhigh lab or turnover and lab or hoard ingsuggests that lab or turnover variesf or groupsofw orkersw ith d i®erent charac teristic s.T w o stud ieshave explic itly looked at the extent ofd i®erentiation. G im pelsonand Lippold t w ere the ¯rst to point out the segm entationof the R ussianlab or m arket b y turnover (G im pelsonand Lippold t, 19 9 7). F irst, they c ite c ase stud y evid ence that inthe R ussianind ustry m ost hiresare either w orkersw ith spec i¯c high skillsor those w ith poor skills, and partic ularly young w orkers.T he c ase stud iesalso suggest that low skillw orkersare m ore likely to separate thanhigh skillw orkers. T his evid ence issupported b y o± c ialaggregate d ata that c on¯rm sthat those inb lue-c ollar oc c upationsand the youngare m ore likely to b e hired and to separate.G im pelsonand Lippold t also look at the c ovariatesofjob tenure inthe 19 9 5 round ofthe R LM S.T hey ¯nd that those w ith short tenure are m ore likely to b e young,lessed uc ated and to w ork insmall, private ¯rm s.Intotal,the evid ence provid ed b yG im pelsonand Lippold t pointstow ard sa large d egree ofsegmentationinterm sofskillsand lab or m ob ility (G im pelsonand Lippold t, 19 9 7). Ina rec ent stud y G rosf eld t et al. (19 9 9 ) look f or evid ence ofsegm entationusing a panelofenterprise d ata. T heir resultsc on¯rm segm entationb y skill. T hey ¯nd out that em ploym ent ofb lue-c ollar w orkers,asopposed to w hite-c ollar w orkers, ism ore responsive to id iosyncratic shoc ksto ¯rm output.Intheir analysis,they are ab le to c ontrolf or various¯rm c harac teristic sand f or unob served heterogeneity ac ross¯rm s(G rosf eld t et al.,19 9 9 ). Ad d itionalevid ence ofthe lab or realloc ationproc essisprovid ed b y terprises (G impelson and L ippoldt,1 997).. 4.

(8) stud iesthat use the R LM S to d esc rib e w orker m ob ility. Foley (19 9 7) exam inestransitionsofw orkersb etw eenemploym ent states.Hisresults c on¯rm high lab or mob ility inR ussia and point to variousind ivid ual c harac teristic sasd eterm inantsoftransitionsb etw eenem ployment states. He estimatesmultinom iallogit m od elsto stud ythe d eterm inantsoftransitionsb etw eenold employm ent, new em ploym ent, unem ployment and 2 out ofthe lab or f orc e. T he m aincharac teristic sthat d etermine transitionsf rom em ploym ent to nonemploym ent are sex, age, ed uc ationand sec torsb y ow nership. Inpartic ular, he ¯nd sthat university ed uc ation red uc esthe prob ab ility ofmoving to unemploym ent or out ofthe lab or f orc e. How ever, he d oesnot ¯nd any e®ec t ofed uc ationinm oving to new job s.Also, w orkingina state ¯rm red uc esthe prob ab ility ofmoving to unem ployment or out ofthe lab or f orc e, and to new job s. In c ontrast, w orking ina private ¯rm increasesthe prob ab ility ofmoving to b oth states.Insum mary,the resultspoint to the im portance ofb oth sec torsb y ow nership and skillsasd eterm inantsofemploym ent transitions(Foley,19 9 7).Ina c losely related stud y Lehm annand W ad sw orth (19 9 8) repeat Foley'smultinom iallogit analysisusing d ata f rom 19 9 4 onw ard s.T he resultsrelated to ed uc ationand sec torsb y ow nership are id entic al.Inpartic ular,b oth stud ies¯nd no evid ence that ed uc ationis a signi¯c ant d eterm inant ofm ovesto new job s.Lookingat separations f rom the state sec tor,Lehmannand W ad sw orth ¯nd only a w eak negative e®ec t ofed uc ationonm ovesto nonem ploym ent.Inad d ition, they stud y d eterm inantsofturnover and new job s.T hey ¯nd that turnover ishigher inthe private sec tor and low er f or those that are old er and those w ith high tenure. T hese resultsseem to c on¯rm that ow nership d oeshave a strongim pac t onjob m ob ility.T o stud y new job s,Lehm ann and W ad sw orth use a regionalsupplem ent ofthe R ussianLab or Forc e Survey (LFS) f rom 19 9 6. T hey ¯nd that w orkersinnew job sare less likely to b e inm anagerial/prof essionaloc c upationsor f em ale (Lehm ann and W ad sw orth,19 9 8).T hisseem sto provid e evid ence that a m ajority ofnew job sare f or low skillw orkers.InT urunen(2 0 0 0 ),Iuse the R LM S 2 Foley (1 997)uses. data from both the ¯rstand the second phase ofthe R L M S. U nfortunately thedatain the¯rstphasedoes notallowforacorrectclassi¯cation of moves tonewemployment.. 5.

(9) d ata to evaluate m ob ility ac rossemploym ent statesb y ow nership.T he resultsc on¯rm that those w ith low er ed uc ationare m ore m ob ile ac ross em ploym ent statesb y ow nership. T hisispartic ularly true ifmob ility isrestric ted to b etw eenstate and nonstate em ploym ent only (T urunen, 2 0 0 0 ). F inally, a rec ent stud y b y G im pelsonand Lippold t provid esevid ence ab out the c om positionofthe private sec tor (G im pelsonand Lippold t,19 9 9 ).T hey use o± c ialaggregate statistic s,asw ellasm ic rod ata, to evaluate the size and c om positionofprivate em ploym ent.T hey ¯nd c on°ic tingresultsonthe c ompositionofprivate em ploym ent d epend ing onthe d ata sourc e.T he rob ust resultsinclud e the ob servationsthat those inprivate sec tor em ploym ent are younger and relatively m ore likely to b e inb lue-c ollar oc c upations. Inad d ition, the d ata suggestsa d i®erentiationw ithinthe private sec tor ac rossed uc ation: the private sec tor includ esb oth those w ith high ed uc ationand those w ith low ed uc ation, w hile those w ith interm ed iate d egreesare more likely to b e inthe state sec tor. Ingeneralthe results point to large variationac ross regions, ¯rm size and sec tors.G im pelsonand Lippold t c onclud e that the private sec tor isc harac terized b y greater lab or turnover, younger and prob ab ly m ore ad aptab le w orkers.. 3 Data and d e¯n itions I use the R LM S to evaluate the d eterm inants oftransitions b etw een em ploym ent statesb y ow nership. For the analysisIc omb ine round s1 and 3,and round s5 and 6 ofthe R LM S to b uild tw o short panelsthat c over 19 9 2 -19 9 3and 19 9 4 -19 9 5,respec tively.3 T hisstrategyallow sm e to have tw o c om parab le samplesofthe R ussianpopulationat tw o d i®erent period softransition.Duringthe ¯rst period ,the R ussianec onomy w as c harac terized b y a large f allinoutput, m ac roec onom ic instab ility and 3. T he R L M S consists of eight rounds of surveys between 1 992 and 1 998. A s a resultofchanges in thesamplingprocedurein 1 994 thedataconstitutes twoseparate longitudinalpanels.. 6.

(10) em erging unemploym ent. P rivatizationw asat anearly stage. During the sec ond period the f allinoutput slow ed d ow n, the m ac roec onomy stab ilized ,w hile unem ployment c ontinued to rise.T he massprivatization program ,started inO c tob er 19 9 2 ,w asinf ullsw ing. Inord er to c onstruc t the sam plesused inthe stud y, Im erge d ata onind ivid ualsf rom c onsec utive round sand restric t the d ata to those b etw een16-72 yearsold . T he resultsare c om parisonsam plesthat are used to verif y representativeness ofthe c onstruc ted variab les. Inthe proc essofb uild ingthe c om parisonsam ple Ilose a numb er ofob servations d ue to attrition,m issing/c on°ic tingd ata and the age restric tion.4 Survey tim ing, numb er ofob servationsinthe originald ata and inthe samples used isd oc um ented inT ab le 1.T he sm aller numb er ofob servationsin the sec ond period re°ec ts a change inthe sampling proc ed ure ofthe originald ata. Com paring the sam ple charac teristic s b ef ore and af ter eliminatingd ata c on¯rm sthat the selec tionto the c om parisonsample is approxim ately rand om . Inthe analysisb elow Iam interested inthe role ofskillinw orker m ob ilityac rossem ployment statesb yow nership.T hree measuresofskills are availab le: ed uc ation,supervisory responsib ility and oc c upation.U nf ortunately, only ed uc ationand supervisory responsib ility are availab le inb oth period s. E d uc ationisassum ed to m ainly m easure generalhum anc apital.Som e ed uc ationc ategories,spec ialsec ond ary ed uc ationin partic ular,also re°ec t m ore spec i¯c trainingthat m ay b e ¯rm or sec tor spec i¯c .T he c onstruc ted ed uc ationc ategoriesroughly c oincid e w ith nationalc ategories. How ever, b ec ause ofrec lass¯c iationofallthose w ith sec ond ary voc ationaled uc ationinthe spec ialsec ond ary ed uc ationc ategory,thisc ategory isoverrepresented .T he rec lassi¯c ationisnec essary to keep the c om parab ility ofthe tw o period s(f or d etail, see T urunen, 5 2 0 0 0 ). Contraryto ed uc ationc ategories,supervisoryresponsib ilityisas4T. heR L M S isasurveyofaddressesandthusdoesnotfollowtheoriginalhousehold whentheymove.T hisfeatureincreasesthenumberofindividualslostduetoattrition. 5 T he originaleducation categories in the t wo panels are slightly di®erent. T he educationcategorieswererecodedasfollows.U niversityeducationincludesthosewho completed university orgraduate school;Specialsecondary education includes those whocompletedspecialsecondary education,technicalschoolorsecondaryvocational. 7.

(11) sumed to proxy higher job -spec i¯c skillsand attachm ent to the job .T he third skillproxy,w hite-c ollar oc c upationisa m ore stand ard measure of skills.W hite-c ollar oc c upationinclud esthose inthe ¯rst f our ISCO c ategories: m anagers,prof essionals,technic iansand assoc iate prof essionals, and c lerks.T he rest are c od ed asb lue-c ollar w orkers(i.e.servic e w orkers, skilled agric ulturalw orkers, c raf t and related trad esw orkers, plant and m ac hine operatorsand elem entary oc c upations).Anad d itionalm easure ofskillisthe hourly w age. T ypic ally, the hourly w age measuresb oth prod uc tivity and the quality ofthe job m atch.T he hourly w age isc onstruc ted b y d ivid ing the af ter tax nominalw age ofthe previousm onth b y hoursw orked inthat month. T he hourly w age c onstruc ted inthis f ashionispotentially m easured w ith error.Inad d ition,since b oth w age and hoursw orked inf orm ationref er only to the previousm onth, hourly w age m ay not c orrec tly m easure longer term returnsto the job .T hisis partic ularly true inthe presence ofw age arrears,c omm oninthe sec ond period .Inord er to evaluate the rob ustnessofthe resultsIestimated all m od elsinthe stud y w ith and w ithout hourly w age, and w ith monthly w age instead ofthe hourly w age.T he resultsf or the skillproxiesremain the sam e. T he em ploym ent state b y ow nership isc onstruc ted usinginf ormationonthe mainoc c upationofthe respond ent and ow nership statusof the enterprise. Inb oth period s, the em ploym ent state isc lassi¯ed in three c ategories: state em ployed , nonstate em ployed and nonem ployed . T he employed includ e those employed inanenterprise, entrepreneurs and those involved inind ivid ualec onomic ac tivity asm ainoc c upation. Iuse inf ormationonow nership to rec lassif y the em ployed to em ployed ineither state or nonstate enterprise.6 F inally,the nonem ployed includ e schoolandnouniversity education;G eneralsecondary education includes thosewith 1 0 years ormore at schooland no university orspecialsecondary education;and P rimary includes thosewith less than 1 0 years ofschooland noothereducation. 6 In detailthe classi¯ cation ofownership is as follows.T hosein stateemployment includethosewhoreportworkinginstateownedenterpriseand/orapublicassociation in the¯rstperiod and thoseworkingin agovernmentowned enterprisein thesecond period.T hose in nonstate employmentinclude those workingin a privately owned, collectively owned (considered as privatized ¯rms)and othertypeof¯rms,including. 8.

(12) the unem ployed asw ellasthose norm ally c lassi¯ed asout-of -the lab or f orc e.T he representativenessofthe d e¯nitionofthe d epend ent variab le isevaluated usinginf orm ationinT ab le 2 .It seem sthat the state sec tor isoverrepresented inthe R LM S sam ple. T here are tw o potentialexplanations.First,it c ould b e that ind ivid ualssim ply d o not have good inf orm ationonthe ow nership ofthe enterprise.How ever,it isnot ob viousw hy thism easurem ent error w ould b e tow ard sstate ¯rm s.Sec ond , the c om parisond ata isf rom a survey ofenterprisesand m ay thusnot b e d irec tly c omparab le.Ingeneral,it hasturned out to b e very d i± c ult to evaluate the exac t size ofthe state and nonstate sec tors. T here are d i± c ultiesinusing the employm ent state b y ow nership that go b eyond m easuringow nership c orrec tly.F irst,it ispossib le that ¯rm sinthe tw o sec tors, state and nonstate, d o not b ehave d i®erently. M ost theoretic alm od elsoftransitionassum e that the tw o sec torsare f und am entally d i®erent (f or exam ple, Aghionand B lanchard , 19 9 4 ) . How ever, it isw ellund erstood inthe transitionliterature that privatizationd oesnot nec essarily lead to changesinthe c ore strategiesofthe ¯rm (see B lanchard , 19 9 7).U nf ortunately it isnot possib le to id entif y restruc turing using household d ata. T husthe d istinctionused here is thentakenasa proxy f or potentialrestruc turing and w hether the tw o sec torsare d istinctly d i®erent rem ainsanempiric alquestion. Sec ond , and related point isthat prec isely som e ofthe c hangesf rom state to nonstate em ploym ent are nam e-plate changesthat have no reale®ec t onthe strategyofthe ¯rm or the positionofthe em ployees.Variousstud ieshave suggested that privatized and new private ¯rm sb ehave very d i®erently w henit c om esto em ployment d ec isions. For exam ple, G im pelsonand Lippold t (19 9 9 ) point out that inm any c asesthe mixed ow nership ¯rm s (a c om monresult ofpartialprivatization) have turned out to have poorer ec onomic perf orm ance asw ellasa lessd ynam ic em ploym ent polic y than f ullyprivate ¯rms.Clearly,the extent to w hic h the c lassi¯c ationm atters f or the resultsd epend sonthe period .T he proportionofprivatized job s ¯rms thathave mixed-ownership in the ¯rstperiod and those whoreportforeign or R ussianindividualsastheowneroftheenterpriseandanymixed-ownedenterprisesin thesecondperiod.In both periods thenonstateemployedincludealsoentrepreneurs and thoseengaged in individualeconomicactivity as main occupation.. 9.

(13) islow at the early part oftransition,w hereasit increasesinthe sec ond period .Ievaluate the im portance ofprivatized job sinthe sec ond period b yseparatingthose ind ivid ualsw ho m ad e a realjob m ove to the nonstate sec tor f rom those w hose ¯rm w assim ply privatized . U nf ortunately no inf orm ationonthe latest job m ove isavailab le inthe ¯rst period . Inthe analysis I c onsid er only those inw orking age, i.e. I exc lud e those younger than18 and old er than54 f or w om enand 59 f or m en.T he f ullsam plesare used to evaluate selec tioninto state em ploym ent.F inally,Ic onstruc t the sam plesused inthe multivariate analysis b y exc lud ingthose not em ployed ina state ow ned enterprise inthe ¯rst round ofeac h panel. Inthe proc ess, Ialso exc lud e those w ith m issing inf orm ationonthe c ontrolvariab les. How ever, b ec ause ofthe grow ing im portance ofw age arrearsand unpaid leave those w hose m ainoc c upationisemploym ent and w ho report either m issingor zero w agesand hoursare not exc lud ed . Instead the m issing valuesofthe hourly w age are c od ed aszero,and a d um my c ontrolvariab le f or m issing/zero values f or w age and hoursisinclud ed inallregressionsw ith the hourly w age. T he other c ontrolvariab lesinclud ed ineach m od elare age,age squared , f em ale d um my, numb er ofc hild ren, engaged inind ivid ualec onom ic ac tivity d um my, hasanad d itionaljob d um my, rurald um my and region d umm ies. U nf ortunately, inf ormationonind ustry isnot availab le. In the restric ted sam ple,allthe charac teristic softhe ind ivid ualsare measured inthe b ase year, i.e.in19 9 2 f or the ¯rst period and 19 9 4 inthe sec ond period .T he only inf orm ationf rom the sec ond round isthe employm ent state ofd estinationb y ow nership.. 4 4. 1. R esul ts Sam pl e c harac teristic s. Looking at the sam ple c harac teristic softhose instate versusnonstate em ploym ent c on¯rm sthat those inthe tw o em ploym ent statesd i®er in term softheir ob servab le charac teristic s.Sam ple charac teristic softhose 10.

(14) instate employm ent,nonstate employm ent and nonem ploym ent in19 9 2 and 19 9 4 are presented inT ab les 3 and 4 , respec tively. T he sample c harac teristic sshow that there isselec tionto state em ploym ent interm s ofob servab le charac teristic s. Asexpec ted , the c om positionofthose in the state employm ent in19 9 2 issimilar to the c ompositionofthe employed populationat the same tim e. How ever, the state em ployed are m ore likely to b e university ed uc ated , f em ale and to live inanurb an area.Inad d ition, they are lesslikely to engage inind ivid ualec onom ic ac tivity, to have w age arrearsor zero w orking hours.Selec tionto state em ploym ent c ontinuesinthe sec ond period .Inad d itionto b eing more likelyto b e f em ale,and universityed uc ated those instate em ploym ent in 19 9 4 are more likely to b e inw hite-c ollar oc c upations.Inb oth period s, the nonem ployed are lesslikely to b e highly ed uc ated and are c learly younger and m ore likely to b e f em ale.T husthe sample charac teristic s ind ic ate that selec tionto state employm ent versusother employm ent is not rand om interm sofskilland ed uc ation. T hese resultsc on¯rm the ¯nd ingsofG im pelsonand Lippold t (19 9 9 ) ab out the c om positionofthe tw o sec tors. Inthe m ainanalysisofthispaper Iuse the restric ted sample to evaluate the d eterminantsofleavingstate job s.T he c harac teristic softhose inthe restric ted sam plesin19 9 2 and 19 9 4 are show ninthe ¯rst c olum n ofT ab les3and 4 ,respec tively.T here issome c hange inthe c om position ofstate em ploym ent over tim e.Com pared to those instate em ploym ent in19 9 2 , the state em ployed in19 9 4 are younger, have m ore child ren, are m ore likely to have university ed uc ation,to engage inind ivid ualec onomic ac tivityand not to b e paid at all.T he increase ofthose w ith w age arrearsisremarkab le b ut not surprising givenpreviousevid ence ab out the generalincrease inarrearsaround 19 9 4 . T he increase inind ivid ualec onom ic ac tivity re°ec tsanalternative survivalm echanism that has b eentypic alf or R ussia.Inad d ition,the state em ployed in19 9 4 are less likely to have zero w orkinghoursand to live inanurb anarea or inthe M osc ow /St.P etersb urg region.Inad d itionto the urb an/m etropolitan e®ec t there are large changesinthe regionalc om positionofthe state. 11.

(15) em ployed .7 F inally,anincreasingshare ofthe state em ployed leave to nonstate em ploym ent or nonemploym ent w ithina year asshow ninT ab le 5. In partic ular the share ofthose leavingstate job sto nonstate em ploym ent increasesover tim e.T hism ay partly re°ec t anincrease inprivatization ac tivity inthe sec ond period . How ever, relative to those that stay the share ofthose w ho leave state job sw ithina year issm all.. 4. 2. Leavingstate job s. T he m ainpart ofthe analysisc onsistsofestim atingd isc rete choic e m od elsofleaving state job s. I¯rst investigate the d eterm inantsofleaving state job susingthe logit mod el.T he resultsf rom logit mod elsofleaving state job sf or the ¯rst period are show ninT ab le 6.8 T he resultsstrongly support the hypothesisthat those w ith poorest skillsare more likely to leave state em ployment inthe early part ofthe transition. Inpartic ular, those w ith university or spec ialsec ond ary ed uc ationare lesslikely to leave state em ploym ent.T he c oe± c ientsofthe tw o variab lesare not 9 signi¯c antly d i®erent. T husre-estim ating the mod elaf ter aggregating the tw o c ategoriesisa valid proc ed ure.T he resultingmarginale®ec t of -0 .058 (signi¯c ant at 5 per c ent) im pliesthat havinghigher thangeneral sec ond aryed uc ationred uc esthe prob ab ility ofleavingstate em ploym ent 7T. hechanges in samplecharacteristics ofthestateemployedareveri¯edbyatwo sample t-testofthe sample means.T he signi¯cantdi®erences are:age (p = 0 :0 65), numberofchildren (p = 0 :0 47), university (p = 0 :0 66).Forthose engaged in IEA , thosewith nowagearrears,with nonzerohours,livingin ruralareas and regions the p-valueis 0 . 000. 8 A potentialcaveatf orthe multivariate analysis is high correlation between explanatoryvariables,whichresults inless accurateestimationofthemodelcoe±cients. Indeed,the levelofpairwise correlation is relatively high forvariables thatmeasure skill,such as between supervisoryresponsibilityandeducation categories.Somewhat surprisingly,the high correlation does notextend tothe hourly wage.A s a result,I estimateskillvariables in separatemodels,controllingforthehourly wage. 9 T he pairwise W ald testforequality ofthe underlyingcoe±cients is rejected for the otherpairs ofeducation categories:university togeneralsecondary (p = 0 :0 0 5), specialsecondary togeneralsecondary (p = 0 :0 54).. 12.

(16) b y 18 per c ent. T he negative ed uc atione®ec t c oincid esroughly w ith the negative e®ec t ofsupervisory responsib ility.Havingsupervisory responsib ility red uc esthe prob ab ility ofleaving state em ploym ent b y 14 per c ent, slightly lessthanhigher ed uc ation. F inally, hourly w age has negative b ut insigni¯c ant e®ec t inallm od els.T he negative e®ec t ofthe hourly w age c ontrollingf or ed uc ationand /or skillislikely to re°ec t d if f erencesinprod uc tivity d ue to the quality ofthe job -w orker m atch and unob served ab ility. T he resultsf or the sec ond period are show ninT ab le 7.T he results c on¯rm the negative e®ec t ofskillproxiesonthe prob ab ilityto leave state job sw ith some im portant changes.Inpartic ular,the e®ec t ofskillproxies isw eaker and m ore restric ted . T he e®ec t ofed uc ationisrestric ted to those w ith university ed uc ationonly.10 How ever,the rem ainingnegative e®ec t is large, having university ed uc ationred uc es the prob ab ility of leaving state em ploym ent b y 30 per c ent. How ever, re-estim ating the m od elusinga single higher ed uc ationc ategoryresultsina m arginale®ec t ofthe same m agnitud e asinperiod one.Although negative, the e®ec t ofsupervisory responsib ility isinsigni¯c ant. T he sam e istrue f or the hourly w age.T he w eaker e®ec t ofw agesislikely to re°ec t the increasing im portance ofab norm alw orking c ond itions and payments.11 Ind eed , those that have a missingw age inthe previousmonth are more likely to leave.For the sec ond period the R LM S hasinf orm ationonoc c upations inad d itionto the ab ove m easuresofskills.T hus,Ire-estim ate the m od el usingw hite-c ollar oc c upationasa proxy f or skills.Havinga w hite c ollar oc c upationturnsout to have a strongnegative e®ec t onthe prob ab ility to leave state em ployment that is sim ilar to the size ofthe e®ec t of university ed uc ation.T hisisc onsistent w ith resultsb y G rosf eld t et al. (19 9 9 ) f rom enterprise d ata, w ho ¯nd that w hite c ollar employm ent is 10 T. hepairwiseW aldtestforequalityis rejected forthepairs:universitytospecial secondary (p = 0 :0 1 6);university togeneralsecondary (p = 0 :0 1 0 ). 1 1 Increase in nonpaymentofwages and non-normalworkinghour s is likely to increasemismeasurementin thehourlywagemeasure.H owever,usingamonthlywage measureinsteaddoes notchangetheconclusionsabove.T hemonthlywageispositive butinsigni¯cantin allmodels.. 13.

(17) lessresponsive to id iosyncratic shocksto ¯rm 'soutput.12 Inad d itionto skillproxies,variousc ontrolvariab leshave a signi¯c ant e®ec t onthe prob ab ility to leave state em ploym ent (not show n).In b oth period sage hasa negative,quad ratic e®ec t w ith a turningpoint at around 4 0 yearsofage.T hisim pliesthat am ongthe w orkingage populationthe youngand those c lose to retirem ent age are m ore likely to leave state em ploym ent.B eingf em ale red uc esthe prob ab ility ofleavingstate em ploym ent inb oth period s.R egionalpatternsare im portant inthe ¯rst period : livinginanurb anarea and livinginM osc ow /St.P etersb urgregionsred uc e the prob ab ility to leave state em ployment,w hile the e®ec t ofother regionsvaries.T he e®ec t ofregionsm ore or lessd isappearsin the sec ond period . Inthe sec ond period , the em phasisshif tsf rom regionald i®erencesto d i®erencesinnon-norm alc om pensationand outsid e ac tivity.T hose engaged inind ivid ualec onomic ac tivity and those that d o not rec eive a w age are m ore likely to leave.Havinganad d itionaljob , how ever, d oesnot have a signi¯c ant e®ec t onthe prob ab ility to leave. Ad d itionalc ontrols, such as payment ingood s have a positive e®ec t. T he latter re°ec t the changingsystem ofc om pensationand inpartic ular the increasingimportance ofnon-normalc om pensationprac tisesinstate 13 ¯rm s,ind eterminingthe lab or m arket outc om e. 12. A sanadditionalexercise,I includebothoccupation(8)and¯rm size(2)dummies as additionalcontrolvariables. T he predictive powerofthe models is signi¯cantly improved. H owever, with respectto the skillproxies, the overallconclusion ofthe results aboveremain.In addition,theoccupation dummies turn outtobesigni¯cant determinants ofleavingthe state sector.Somewhatsurprisingly, ¯rm size dummies donothaveasigni¯cante®ect. 13 A s an additionalexperiment, I estimate model(1 )includingsubsidies from the enterprises tothehouseholdas anadditionaldummyinthe¯rstperiod.Surprisingly, subsidies havea smallpositivee®ecton leavingstate employment(amarginale®ect of0 . 0 3 signi¯cantat5%).A ccordingtothis resultenterprise bene¯ts donotreduce the probability to leave state jobs. H owever, the measure ofenterprise bene¯ts is somewhatproblematic.Itis measuredonthehouseholdlevelanddoes notaccurately measure the compensation tothe worker.A lso,itincludes alltypes ofbene¯ts provided bythe¯rm,includingdiversecategories such as subsidized meals and housing. O nepotentialexplanationforthepositivee®ectis simplythattheenterprisebene¯ts measurenon-monetary compensation in failing¯rms.. 14.

(18) T he d eterm inants ofleaving state job s seem to c hange b etw een the tw o period s. Inpartic ular, there appearsto b e a generalshif t to m ore c oncentrated d eterm inants ofleaving state job s interm s ofthe skillproxies. T o f orm ally evaluate the d i®erencesover tim e, Iperf orm a pooled d ata test ofstab ility ofthe results. Ipoolthe d ata f rom the tw o period s and estimate the logit m od els ab ove includ ing a d ummy f or the ¯rst period and interac tionsofallvariab lesw ith the ¯rst period d ummy.It turnsout that none ofthe interac ted ed uc ationor supervisory responsib ility variab lesare signi¯c antly d i®erent f rom zero.T hisim plies that it isnot possib le to statistic allyd isc rim inate b etw eenthe skille®ec ts inthe tw o period s. How ever, the poor pred ic tive pow er ofthe m od els m ay red uc e the pow er ofthe tests.O verall,there are enough d i®erences inthe tw o sets ofresults to c onsid er the m od els unstab le over tim e. T hisresult isc on¯rmed b y likelihood ratio teststhat c learly rejec t the 14 homogeneity ofthe tw o results. T he c harac teristic softhose leaving state job sto private em ploym ent are likely to b e very d i®erent f rom those leaving to nonem ploym ent. T he logit mod eld oesnot c apture thisd i®erence. T husI c ontinue the analysis b y estim ating multinom iallogit mod els w ith three d estinationstates:state em ploym ent,nonstate em ploym ent and nonemploym ent, using the sam e m od elspec i¯c ationsas ab ove. T he results f or the ¯rst period are presented inT ab le 8. T he resultsc on¯rm that higher ed uc ationand supervisory responsib ility have a negative e®ec t on the prob ab ility to leave state employm ent irrespec tive ofthe d estination state.E d uc ationc ontinuesto have a uni¯ed negative e®ec t onthe prob ab ility to leave f or those that leave to nonem ploym ent. T he ed uc ation e®ec tsare very large,they vary f rom a d ec rease inprob ab ility of35 per c ent f or those w ith generalsec ond ary ed uc ationto 4 5 per c ent f or those w ith spec ialsec ond ary ed uc ation.Inc ontrast,the e®ec t ofed uc ationis restric ted to university ed uc ationf or those that leave to nonstate employm ent. Allthree ed uc atione®ec tsare statistic ally d i®erent ac ross 1 4 Foracomparisonofthef ullyinteractedmodelandthemodelwithoutinteractions,. theÂ 2 values from likelihood ratiotests with 1 8 to20 degrees offreedom rangefrom 111. 29 to1 1 8. 1 7.. 15.

(19) nonstate and nonem ploym ent equations.15 Aggregating the tw o higher ed uc ationc ategoriesresultsinm arginale®ec tsof-0 .033 and -0 .02 2 f or nonstate em ploym ent and nonem ploym ent respec tively (b oth signi¯c ant at 5 per c ent). Inc ontrast, the negative c oe± c ientsofsupervisory responsib ilityare not signi¯c antlyd i®erent f rom eac h other.F inally,hourly w age,although statistic ally insigni¯c ant,seem sto have a m ore negative e®ec t ontransitionsto nonstate employm ent rather thanontransitions to nonem ploym ent. T he e®ec tsofskillproxiesare m ore lim ited and to som e extent reversed inthe sec ond period . T he results are presented inT ab le 9 . Higher ed uc ationc ontinuesto have a negative e®ec t ontransitionsto nonstate em ploym ent. Having university ed uc ationred uc esthe prob ab ility ofleavingto nonstate employm ent b y 35 per c ent (c om pared to 15 per c ent inthe ¯rst period ).Despite the nonsigni¯c ant m arginale®ec t of spec ialsec ond ary ed uc ation,the m arginale®ec t ofanaggregated higher ed uc ationto nonstate issigni¯c ant (-0 . 0 4 5,signi¯c ant at 5 per c ent).In c ontrast to the resultsofthe ¯rst period , ed uc ationd oesnot seem to m atter at allf or transitionsto nonemploym ent.16 Supervisory responsib ility hasa w eak negative e®ec t f or transitionto nonem ploym ent, b ut hasno e®ec t ontransitionto nonstate employm ent.Instead those w ith w hite-c ollar oc c upationare unlikely to leave state job sto nonstate employm ent.T he e®ec t isrelatively large,a red uc tionof34 per c ent inthe prob ab ility to leave state em ployment to the nonstate em ploym ent.T he 1 5 In the nonstate equation,the pairwise W. ald testforequality is rejected forthe pair:university to generalsecondary (p = 0 :0 28).In the nonemploymentequation, thesametestis rejectedforthepairs:universitytogeneralsecondary(p = 0 :0 72)and specialsecondary to generalsecondary (p = 0 :0 28).A cross equations (eg.nonstate universitytononemploymentuniversity)thepairwiseW aldtestforequalityisrejected for: university education (p = 0 :0 28);specialsecondary education (p = 0 :0 0 0 )and generalsecondary education (p = 0 :0 27). 1 6 For transitions to nonstate employment the pairwise W ald test f or equality is rejected for the pairs: university to special secondary (p = 0 :0 22)and university to generalsecondary (p = 0 :0 1 1 ).Fortransitions to nonemploymentthe same test is rejected for: university to generalsecondary (p = 0 :0 31 ). A cross equations the pairwise W ald test for equality is rejected for: general secondary education (p = 0 :0 96).. 16.

(20) e®ec t isd i®erent f rom that ofw hite-c ollar oc c upationontransitionto 17 nonemploym ent. Contrary to the previousresults,b ut c onsistent w ith logit resultsf or the sec ond period hourly w age isnever signi¯c ant.18 Consistent w ith logit results, c ontrolvariab lesthat are important d eterm inantsofleavingstate job sinclud e age,sex,regions,non-norm al c om pensationand outsid e ac tivity (not show n).T he strongage e®ec t in the logit resultsrem ainsvalid f or those leavingto nonem ployment only. It appearsthat there isno evid ence that those leaving to nonstate employm ent are m ore likely to b e youngand ad aptab le.Instead the young are m ore likely to experience nonem ployment.Inc ontrast,b eingf em ale red uc esthe prob ab ilityoftransitionto nonstate employm ent only.T here isno signofa signi¯c ant d i®erence b etw eenthe sexesinthe prob ab ility to m ove to nonem ploym ent,w hic h seem sto imply a relatively strongattac hm ent to job sand the lab or f orc e f or R ussianf em ales.R egionsm atter d uring the ¯rst period and to transitionsto nonstate em ploym ent only. Living inanurb anarea hasa strong negative e®ec t, w hile other regionshave signi¯c ant c oe± c ientsw ith varyingsigns.Asexpec ted ,f ailingto report positive w orkinghoursincreasesthe prob ab ility ofmoving to nonem ployment.Consistent w ith the increasingtrend ofarrears,not b eingpaid inthe previousm onth increasesthe prob ab ility ofm ovingto nonemploym ent inthe sec ond period .Inad d ition,b eingengaged inind ivid ualec onom ic ac tivity hasa positive e®ec t onthe prob ab ility to m ove to nonstate em ploym ent inthe sec ond period .Havinganad d itionaljob d oesnot have any e®ec t onthe prob ab ility to leave.Inall,it seem sthat engaging inoutsid e ac tivity d oesnot seem to red uc e the prob ab ility to leave state job s.19 17. T hepairwise W ald testforequality across equations is rejected (p = 0 :0 1 2). Includingoccupationand¯rm sizedummies reduces thesigni¯canceofuniversity education in the nonstate equation. B oth occupation and ¯rm size dummies are importantin thenonemploymentequation.In particular,workingin amedium sized ¯rm (1 0 1 -1 0 0 0 employees)reduces theprobabilitytobecomenonemployed.U singthe monthly wage instead ofthe hourly wage results in a weak positive wage e®ectfor those movingtononstate employmentand weak negative e®ectforthose movingto nonemploymnent. 1 9 In addition, subsidies f rom the enterprise have a positive e®ectin the nonstate equation (0 . 0 49 signi¯cantat5 percent)andanegativee®ectin thenonemployment 18. 17.

(21) T o test the stab ility ofthe resultsover tim e Iuse the same pooled regressiontest asinthe previoussec tion. T he only signi¯c ant skillinterac tionterms are negative spec ialsec ond ary and generalsec ond ary interac tionsinthe nonem ploym ent equation.T hisresult ind ic atesthat having any ed uc ationab ove primary ed uc ationred uc esthe prob ab ility oftransitionto nonemploym ent inthe ¯rst period relative to the sec ond period .Againthe likelihood ratio testsrejec t stab ility ofthe resultsover 20 tim e,suggestingthat the pooled resultsthemselvesare not valid . Asd isc ussed ab ove, the transitionsto nonstate em ploym ent c onsist ofb oth privatizationsand true job m oves f rom state to nonstate em ploym ent. It isthuspossib le that the resultsare d rivenentirely b y the struc ture ofprivatization.Ind eed , inthe sec ond period a m ajority, 71 per c ent inthe sample, oftransitionsto nonstate em ployment are privatizationsthat d o not involve a job c hange. Inord er to evaluate the importance ofprivatization,Ire-estim ate the multinomiallogit m od elsusing a separate state f or privatized ¯rm s. T he results, presented intab le 10 , show that the skille®ec t ispartly d ue to the struc ture of privatization.T hose w ith university or spec ialsec ond ary ed uc ationare lesslikely to w orkin¯rm sthat are privatized .T he changesinprob ab ility are relatively large and very signi¯c ant.T hese resultsare c on¯rm ed b y the large m arginale®ec t ofw hite-c ollar oc c upationf or those inprivatized ¯rm s.W hite-c ollar oc c upationred uc esthe prob ab ilityofb eingina ¯rm that w asprivatized b y 4 1 per c ent.Insum mary,the resultssuggest that those w ith higher ed uc ationor inw hite-c ollar oc c upationsare more likely to stay instate ¯rm sb ec ause their ¯rm islesslikely to b e privatized . Assuming that privatizationresultsinrestruc turing, the w eight onthose w ith low er skillsam ongthe privatized moverssuggeststhat the struc ture ofthe privatizationproc esshasc ontrib uted to the instab ility equation (-0 . 0 1 8,signi¯cantat1 0 percent).T hesubsidies de¯nitelyhindermoves to nonemployment.T his is notsurprising,given thatnonemploymentin generalis very undesirable.T he positive coe±cientfortransitions tononstateemploymentremains somewhat puzzling. It seems to suggest that the enterprise bene¯ts function as a nonmonetary perk provided to best workers. H owever, the perk does notseem to increaseattachmenttostatejobs. 20 T heÂ 2 values with 36 to40 degrees offr eedom rangefrom 1 64. 90 to1 77. 47.. 18.

(22) oflow skillemploym ent.For those that are makinga realjob m ove f rom state to nonstate job s, ed uc ationred uc esthe prob ab ility only f or those w ith university ed uc ation,b y 38 per c ent.T hisc on¯rm sthat w hile the e®ec t ofprivatizationd om inates, ed uc ationd oesm atter f or job m oves asw ell.Supervisory responsib ility rem ainsnegative f or those m akinga transitionto nonem ploym ent.T hissupportsthe suggestionthat supervisoryresponsib ilityincreasesattachm ent to em ployment,irrespec tive of ow nership type. Inad d itionto skille®ec ts, variousc ontrolvariab leshave d i®erent e®ec tsonprivatized and nonstate em ployment (not show n).Asexpec ted neither age nor sexmatter f or those inprivatized ¯rms.T hose that are engaged inind ivid ualec onom ic ac tivity are m ore likely to b e in¯rm s that are privatized .T hissuggeststhat ind ivid ualec onomic ac tivity d oes not c ontrib ute to job searc h inthe private sec tor. Inad d ition, som e regionald i®erencespersist inthe struc ture ofprivatization.Contrary to those inprivatized ¯rms, those w ho make a realjob m ove to nonstate em ploym ent are lesslikely to b e f em ale. Af ter separating out those in privatized ¯rm s, a w eak quad ratic age e®ec t re-em erges. T hese results suggest that inad d itionto a skille®ec t,f emalesand those intheir m id d le age are lesslikely to make a true job m ove to the nonstate sec tor.. 5 Disc ussion T he resultspresented inthe previoussec tionshow that the realloc ation oflab or f rom state to private job sinR ussia variesf or d i®erent hum an c apitaland skillgroups.T ogether w ith those inw hite-c ollar oc c upations and those w ith supervisory responsib ility, the highly ed uc ated are also lesslikely to leave state job s.T he resultshave d irec t im plic ationsf or the grow th ofthe private sec tor, ec onom ic perf orm ance and lossofhum an c apitald uring transition. T heir im portance, how ever, d epend onthe interpretationofthe results.T he resultsare potentially c onsistent w ith severalstoriesofthe realloc ationoflab or.Four storiesseem partic ularly relevant: attachm ent,b ad job s,skillmism atch and privatization.. 19.

(23) F irst, the resultsc ould b e interpreted interm sofanattachm ent story. T he attachm ent story isa f avorite explanationoflab or hoard ing ingeneralinR ussia.Inthe c ontext ofthisstud y,ac c ord ing to this interpretationsw orkersw ith higher skillsare f or som e reasonm ore attac hed to state job sthanthose w ith poorer skills. T here are various potentialreasonsf or attachm ent. O ne apparent reasonisgivenb y hum anc apitaltheorythat pred ic tsthat those w ith higher job -spec i¯c skills are lesslikely to separate ingeneral.B y d e¯nitionsuc h humanc apitalis not transf erab le and islost inthe c ase ofseparation.How ever,the skill proxiesused inthe stud y are mostly m easuresofgeneralrather than job -spec i¯c hum anc apital.Further,job -spec i¯c hum anc apitalw ithout some levelofsec tor-spec i¯c ity d oesnot explainthe resultsac rossemploym ent statesb y ow nership. Sec ond potentialreasonf or attachm ent isa higher levelofnonpec uniary b ene¯tsinthe state ¯rm f or those w ith higher skills.A signi¯c ant share ofR ussianstate ¯rm sprovid ed soc ial b ene¯tssuc h ashousing, m ed ic aland child c are to their w orkers, w hile m ost private ¯rm sw ere unab le to provid e similar b ene¯ts.It hasb een argued that provisionofsoc ialb ene¯tshasb eenused asa m ethod to inc rease attac hm ent and there isevid ence that theyare provid ed m ostlyto those at the top ofthe w age d istrib ution(K olev,19 9 8).T hussoc ialb ene¯tsm ay have c ontrib uted to attachm ent.How ever,their im portance is c learly d ec reasingastransitionproc eed s(see Comm and er and Schankerm an,19 9 7).F inally,higher attachm ent to state ¯rm sc ould b e explained b y soc io-c ulturalf ac tors.T hose w ith higher skillsm ay b e m ore likely to have soc io-c ulturalreasonsf or higher attachment to the state job .T hese includ e id eology,soc ialist w orkethic and job status. Sec ond ,the resultsare potentially c onsistent w ith a b ad job sstory. T he b ad job sstory im pliesthat availab le nonstate sec tor job sare pred ominantly low skilljob sand ,asa result,there isa lack ofd em and f or skilled lab or inthe nonstate sec tor.Ind eed ,b ec ause ofoverinvestment in heavymanuf ac turingd uringthe soc ialist era,the transitionto m arket involved a sec toralshif tf rom manuf ac turingto servic es.T husthe nonstate job sare proportionally m ore likely to b e inservic e and c raf t oc c upations that are typic allow -skilloc c upations. Inad d ition, the prevalence of. 20.

(24) short tim e horizonsislikely to result insm allprivate R & D investm ent d uring transition,thusexac erb atingthe lack ofd em and f or highly ed uc ated w orkers. How ever, the c lassi¯c ationto good and b ad job sisnot self -evid ent. Ind eed , som e new servic essuch ¯nancialservic es, require relatively high skills. U nf ortunately, there islittle evid ence ab out the quality ofjob sac rossthe tw o sec tors.T w o ad d itionalpiec esofevid ence b ased onw age evid ence suggest that although nonstate job sare pred ominantly low skilljob sthey are not nec essarily "b ad " job s. F irst, b ased ona ranking ofoc c upationsb y earnings, monthly or hourly w ages, the nonstate job sare not only inthe low er ranks.O nthe c ontrary,there are proportionally m ore senior m anagers,the highest earningsc ategory,and lessthose inelem entary oc c upations,the low est earningsc ategory,inthe nonstate sec tor thaninthe state sec tor. Sec ond , the earningsofthose w ith higher ed uc ationare relatively higher inthe nonstate sec tor than inthe state sec tor.For those w ith university ed uc ationthe nonstate to state w age ratio isb etw een1. 2 -1. 3in19 9 2 and 1.4-1. 7in19 9 4 ,w hile the same ratio f or those w ith only prim ary ed uc ationis0 .8 in19 9 2 and 1. 2 21 in19 9 4 ,d epend ingonthe w age m easure used . T hird potentialinterpretation, skillm ism atch, isc losely linked to previousinterpretations.How ever,instead oflac k ofsupply or d em and , the skillmism atch story im pliesa f und am entalincom patib ility ofskills that exist instate job sand skillsthat are d em and ed innonstate job s. Interm sofhumanc apitaltheory the m ismatc h story isanextensionof spec i¯c ity to sec tor-spec i¯c skills.It hasb eenargued that narrow skills learned inthe old ed uc ationalsystem , inpartic ular invoc ationaled uc ation,are poorly transf erab le to the new private environm ent (B oeriet al.19 9 8).Inad d ition,the incom patib ility ofskillsislikely to b e a more seriousimped im ent ofm ob ility f or high skillgroups.Anob viousexample ofsuch skillmism atch are m arket skills,suc h asm od ernm anagem ent tec hniques.Ind eed , skillm ism atch inthisc ategory ofw orkersw asrec 21 T. heevidencepresentedhereis rudimentary.Inparticular,abroaderde¯nitionof good versus bad jobs thatwould include probability ofwage arrears and short-time work,job securityandnonpecuniarybene¯ts wouldbeneededforrobustconclusions. Inaddition,multivariatemethodswouldprovidestrongerevidenceofboththeranking ofgood versus bad occupations and theeducation premium in thenonstatesector.. 21.

(25) ognized early and trainingprogram sw ere d esigned to spec i¯c ally target those w ith potentialto ¯llthe gap f or m anagem ent skills(O E CD,19 9 5). U nf ortunately, it isnot possib le to d irec tly measure the extent ofskill m ism atc h.How ever,the mism atch story seem sto b e roughly c onsistent w ith the w age evid ence presented ab ove. F inally,the resultsshow that there isa b lue-c ollar b iasinthe struc ture ofprivatization. B lue-c ollar job sare more likely to b e privatized . E xplaining thisb iasw ould require a stud y ofc orporate governance issuesthat are b eyond the sc ope ofthisstud y.How ever,the b iastow ard s b lue-c ollar job sinprivatizationc ould b e partlyexplained b ythe ind ustry struc ture ofstate job s.T he state sec tor includ esed uc ation,health c are and government ad m inistrationsec tors,w hich are likely to have a higher proportionofw ell-ed uc ated w orkers.Ine®ec t these sec torsrepresent the portionofemploym ent that islikely to remainstate ow ned . How ever, the skillb iasm ayalso b e a result ofselec tive privatizationsofprod uc tion sec torsw ith high skilled lab or.E xam plesw ould includ e strategic energy ind ustries,and ind ustriesthat c ontinue to supply the m ilitary. T he relative im portance ofeach ofthese interpretationsisunclear. How ever,it seem sc lear that the b lue-c ollar b iasinthe struc ture ofprivatizationc onstitutesa partialinterpretation,partic ularly inthe sec ond period .T he rem ainingnegative e®ec t to b e explained isc oncentrated to those w ith university ed uc ation.W hile the attachm ent story appearsto b e important ingeneral,it seem slessrelevant f or those w ith high levels ofed uc ation.T husthe remaining stories, b ad job sand skillm ism atch, appear to b e the m ost likely explanationsofthe results. Inlight ofthisinterpretationthe implic ationsofthe resultsseem partic ularly troub ling. F irst, a d irec t im plic ationis that the grow th potentialofthe private sec tor islim ited .It suggeststhat not enough emphasishasb eenput onpolic iesthat c ontrib ute to the quality ofprivate em ploym ent.Inad d ition,d epend ingonthe extent ofskillm ismatc h,it m ay take som e time b ef ore appropriate market skillsare availab le.Sec ond ,the pred om inance oflow skilljob sinthe private sec tor isb ad new s f or ec onomic perf orm ance.Assum ing that the nonstate sec tor job sare m ore prod uc tive and alloc ate skillsm ore e± c iently,slow realloc ationof 22.

(26) hum anc apitalw illresultsinlow er lab or prod uc tivity and output d uring transition. Ind eed , it seemsplausib le that slow realloc ationofhum an c apitalhasalread y c ontrib uted to the poor output perf orm ance inR ussia.Inad d ition,to the extent that the private sec tor representsthe f uture grow th potentialofthe ec onomy,the grow th b ase ofthe R ussianec onomy islim ited b y lac k ofappropriate hum anc apital. T hird c onsequence of the resultsisthat anim portant resourc e,those w ith high generalhum an c apital,isnot c ontrib utingto the transition.It also suggeststhat those w ith low skillsend up should eringmost ofshort runm ic roec onomic c osts d uring transition. How ever, som e ofthem are also more likely to reap the b ene¯tsofm oving.. 6 Sum m ary Inthisstud y,Ihave exam ined the d eterm inantsofleavingstate job sin R ussia usingrepresentative household d ata,the R LM S.T he resultsf rom variousd isc rete c hoic e m od elsshow that those w ith higher skillsare less likelyto leave state job s.T he negative e®ec tsare relativelylarge insom e c ases. Inpartic ular, having university ed uc ationred uc esthe prob ab ility to leave state job sto nonstate job sb y 15 to 38 per c ent. Further, the negative e®ec tsd epend b oth onthe d estinationstate and the tim e period .Duringthe ¯rst yearsoftransition,those w ith higher ed uc ation and supervisory responsib ility are lesslikely to leave state job s.Later, those w ith higher ed uc ationor inw hite-c ollar oc c upationsare lesslikely to leave state job sand partic ularly lesslikely to leave to nonstate employm ent. Inthe sec ond period , m ost ofthe negative e®ec t seem sto b e d rivenb y a b lue-c ollar b iasinthe struc ture ofprivatization. T he resultshave implic ationsf or the grow th ofthe private sec tor, ec onom ic perf orm ance and lossofhum anc apitald uring transition.G ivenaninterpretationb ased onb ad job sinthe private sec tor,and skillmism atch the resultshave troub lingim plic ationsf or the R ussianec onomy.. 23.

(27) R ef eren c es [1] Aghion,P .and B lanchard ,O .(19 9 4 ): "O nthe Speed ofT ransitionin CentralE urope",NB E R M ac roeconomic sAnnual,Camb rid ge,M A. [2 ] B lanchard ,O .(19 9 7): T he E conomic sofP ost-Communist R eform, O xf ord U niversity P ress,O xf ord . [3] B oeri, T . , B urd a, M ., K ÄollÄo, J (19 9 8): M ed iatingthe T ransition. Institute f or E ast-W est Stud ies. [4 ] Com m and er, S., Dhar, S.and Y emtsov, R .(19 9 5): "How R ussian Firms M ake T heir W age and E m ployment Dec isions", inW orld B ank (19 9 5): U nemployment, R estruc turingand the Labor M arket inE asternE urope and R ussia,W ashington. [5] Com m and er, S. , M c Hale, J .and Y emtsov, R .(19 9 5): "R ussia", in U nemployment, R estruc turingand the Labor M arket inE asternE urope and R ussia,W orld B ank,W ashington,pp. 14 7-19 2 . [6] Com m and er,S.and Schankerm an,M .(19 9 7): "E nterprise R estruc turingand Soc ialB ene¯ts",E conomic sofT ransition5(1),pp.1-2 4 . [7] Foley, M .(19 9 7): "Lab or M arket Dynam ic sinR ussia", E conomic G row th Center d isc ussionpaper 780 ,Y ale. [8] G im pelson,and Lippold t (19 9 7): "Lab our T urnover inthe R ussian E c onomy", inLabor M arket Dynamic s inthe R ussianFed eration, O E CD,P aris,pp.17-55. [9 ] G im pelson, and Lippold t (19 9 9 ): "P rivate Sec tor E m ployment in R ussia",E conomic sofT ransition,7(2 ),pp.50 5-533. [10 ] G reene,W .(19 9 8): E conometric Analysis,M ac M illan,NY . [11] G rosf eld t, I. , Senik-Leygonie, C., Verd ier, T . , K olenikov, S.and P altseva,E .(19 9 9 ): "Dynam ism and Inertia onthe R ussianLab our M arket: A M od elofSegm entation",CE P R d isc ussionpaper 2 2 2 4 . 24.

(28) [12 ] K olev, A.(19 9 8):"T he Distrib utionofE nterprise B ene¯tsinR ussia and their Im pac t onInd ivid ualsW ell-B eing", E U I E conomic s w orkingpaper 89 /5. [13] Lehm ann, H.and W ad sw orth, J .(19 9 8): "T enuresthat Shook the W orld ",T he W illiam David sonInstitute w orkingpaper 160 . [14 ] M etalina, T .(19 9 6): "E m ployment P olic y inanInd ustrialE nterprise", inClarke,S.(E d ): Labour R elationsinT ransition: W ages, E mployment and Ind ustrialCon°ic t inR ussia,E d w ard E lgar,Cheltenham ,U K . [15] O E CD (19 9 5): R ussianFed eration,P aris. [16] Stand ing, G .(19 9 6): R ussianU nemployment and E nterprise R estruc turing,M ac M illanP ress,Lond on. [17] Stata Corporation(19 9 9 ): Stata R eference M anual, R elease 6, Stata P ress,College Station,T exas. [18] T urunen, J .(2 0 0 0 ): "E d uc ationand Sec toralM ob ility inR ussia", unpub lished m anusc ript,E uropeanU niversity Insitute.. 25.

(29) T ab le 1.Struc ture ofR LM S d ata and sam ples. R ound 1 R ound 3 R ound 5 R ound 6 T im ing 0 7-10 /19 9 2 0 7{0 9 /19 9 3 11-12 /19 9 4 10 -12 /19 9 5 T otalN 16,64 1 15,0 37 11,2 84 10 ,64 8 ComparisonN 9 ,32 0 6,165 FullN 6,80 8 4 ,4 0 5 R estric ted N 4 ,4 36 1,9 9 4 Notes: 1.O b servationsom itted inb uild ingthe c om parisonsam ple d ue to (period 1, period 2 ): Attrition(3,110 , 2 ,4 30 ), M issing/Con°ic ting d ata (3,60 4 ,2 ,0 80 ),Not b etw een16-72 yearsofage (60 7,60 9 ). 2 .O b servationsom itted inb uild ingthe f ullsam ple d ue to: Not inw orkingage,b etw een18-54 (59 f or m en) yearsofage (2 ,512 ,1,760 ). 3.O b servationsom itted inb uild ingthe restric ted sam ple d ue to: Not in state em ploym ent inb ase year (2 ,372 ,2 ,4 11).. 26.

(30) T ab le 2 .E m ploym ent b y ow nership. 19 9 2 G oskom stat,19 9 2 19 9 4 G oskomstat,19 9 4 State sec tor 81.6 69 .8 62 .4 4 5.8 Nonstate sec tor 18.4 30 .2 37.6 54 .2 N 5,319 na. 3,4 85 na. Notes: 1.Authorsc alculationsb ased onthe c om parisonsample. 2 .G oskom stat d ata f rom T ab le 1 inG impelsonand Lippold t (19 9 9 ).. 27.

(31) T ab le 3.Sam ple c harac teristic s,19 9 2 . Variab le State Nonstate Nonempl. E d uc ationc ategories: U niversity .20 .15 .12 Spec ialsec ond ary .41 .40 .34 G eneralsec ond ary .24 .25 .34 P rimary .15 .20 .21 Supervisory responsib ility .24 .22 :0 2 :0 2 Hourly w age (th R ) (:0 4 ) (:0 4 ) Controlvariab les: 39 :0 9 38:0 2 33:12 Age (9 :66) (10 :0 6) (12 :36) Fem ale .52 .40 .67 1:0 4 1:0 6 1:0 2 Numb er ofc hild ren (:9 6) (1:0 2 ) (1:0 0 ) Hasanad d itionaljob .04 .03 E ngaged inIE A .02 .07 No w age arrears .91 .83 Nonzero hours .87 .81 R ural .18 .36 .18 R egions: M osc ow /St.P etersb urg .11 .10 .11 North/North E ast .11 .11 .09 Central .13 .15 .12 Volga .11 .06 .10 North Cauc asia .17 .22 .21 U ral .21 .10 .16 W est Sib eria .05 .17 .08 E ast Sib eria .11 .08 .12 Notes: 1.Authorsc alculationsb ased onthe f ullsam ple. 2 .M eans,stand ard d eviationsinparenthesis.. 28.

(32) T ab le 4 .Sam ple c harac teristic s,19 9 4 . Variab le State Nonstate Nonempl. E d uc ationc ategories: U niversity .22 .18 .13 Spec ialsec ond ary .40 .44 .34 G eneralsec ond ary .23 .23 .31 P rimary .15 .15 .21 Supervisory responsib ility .23 .22 W hite-c ollar oc c upation .45 .34 1:34 1:54 Hourly w age (th R ) (2 :69 ) (3:14 ) Controlvariab les: 38:61 37:56 33:60 Age (9 :72 ) (9 :9 3) (12 :34 ) Fem ale .52 .43 .60 1:0 9 1:0 6 1:0 6 Numb er ofc hild ren (:9 8) (:9 6) (1:11) Hasanad d itionaljob .04 .05 E ngaged inIE A .06 .10 No w age arrears .76 .75 Nonzero hours .92 .90 R ural .26 .22 .25 R egions: M osc ow /St.P etersb urg .07 .10 .09 North/North E ast .08 .08 .07 Central .17 .19 .17 Volga .20 .16 .16 North Cauc asia .11 .12 .17 U ral .16 .16 .14 W est Sib eria .10 .09 .11 E ast Sib eria .10 .09 .09 Notes: 1.Authorsc alculationsb ased onthe f ullsam ple. 2 .M eans,stand ard d eviationsinparenthesis.. 29.

(33) T ab le 5.T ransitionprob ab ilities. Destinationstates O riginstate State Nonstate Nonem ployment All 19 9 2 to 19 9 3: :72 7 :19 8 :0 76 1:0 0 State (3;2 2 4 ) (877) (335) (4 ;4 36) 19 9 4 to 19 9 5: :661 :2 57 :0 82 1:0 0 State (1;317) (513) (164 ) (1;9 9 4 ) Notes: 1.Authorsc alculationsb ased onthe restric ted sam ple. 2 .Sam ple f requencies,numb er ofob servationsinparenthesis.. 30.

(34) T ab le 6.Leavingstate job s(logit m od el),19 9 2 to 19 9 3. (1) (2 ) ¡0 :0 78 U niversity (¡3:2 4 ) ¡0 :0 54 Spec ialsec ond ary (¡2 :65) ¡0 :0 2 8 G eneralsec ond ary (¡1:2 8) ¡0 :0 4 2 Supervisory responsib ility (¡2 :62 ) ¡0 :4 76 ¡0 :4 9 7 Hourly w age (th R ) (¡1:75) (¡1:82 ) Sum m ary statistic s: N 4 4 36 4 4 36 2 W ald Â (d f) 2 2 8.83(2 0 ) 2 2 0 .34 (18) 2 P seud o R 0 .04 8 0 .04 7 Notes: 1. T he results are m arginale®ec ts c alculated f rom logit c oe± c ients. R ob ust t-statistic sofc oe± c ientsinparenthesis. 2 .T he om itted ed uc ationc ategory isprim ary ed uc ation. 3. T he c ontrolvariab lesinclud ed ineac h mod elare age, age squared , fem ale,numb er ofc hild ren,engaged inind ivid ualec onom ic ac tivity,has anad d itionaljob ,nonm issingw age,nonzero hours,ruraland region(7) d umm ies. 4 .Allc harac teristic sare m easured inthe b ase year,19 9 2 .. 31.

(35) T ab le 7.Leavingstate job s(logit m od el),19 9 4 to 19 9 5. (1) (2 ) (3) ¡0 :117 U niversity (¡2 :9 9 ) ¡0 :0 39 Spec ialsec ond ary (¡1:12 ) ¡0 :0 12 G eneralsec ond ary (¡0 :33) ¡0 :0 34 Supervisory responsib ility (¡1:2 8) ¡0 :0 9 8 W hite-c ollar oc c upation (¡3:9 6) ¡0 :0 0 0 ¡0 :0 0 1 ¡0 :0 0 1 Hourly w age (th R ) (¡0 :0 3) (¡0 :31) (¡0 :18) Sum m ary statistic s: N 19 9 4 19 9 4 19 9 4 2 W ald Â (d f) 67.43(2 0 ) 56.56 (18) 68.83(18) 2 P seud o R 0 .02 7 0 .02 2 0 .02 8 Notes: 1. T he results are m arginale®ec ts c alculated f rom logit c oe± c ients. R ob ust t-statistic sofc oe± c ientsinparenthesis. 2 .T he om itted ed uc ationc ategory isprim ary ed uc ation. 3. T he c ontrolvariab lesinclud ed ineac h mod elare age, age squared , fem ale,numb er ofc hild ren,engaged inind ivid ualec onom ic ac tivity,has anad d itionaljob ,nonm issingw age,nonzero hours,ruraland region(7) d umm ies. 4 .Allc harac teristic sare m easured inthe b ase year,19 9 4 .. 32.

(36) T ab le 8.Leavingstate job s(multinom iallogit mod el),19 92 to 199 3. (1) (2 ) Nonstate Nonem pl. Nonstate Nonempl. ¡0 :0 30 ¡0 :0 34 U niversity (¡1:81) (¡3:30 ) ¡0 :0 0 6 ¡0 :0 4 1 Spec ialsec ond ary (¡0 :78) (¡3:9 7) 0 :0 0 6 ¡0 :0 2 8 G eneralsec ond ary (0 :0 3) (¡2 :54 ) ¡0 :0 2 3 ¡0 :0 18 Supervisory responsib ility (¡1:98) (¡2 :13) ¡0 :2 32 ¡0 :30 0 ¡0 :2 2 8 ¡0 :339 Hourly w age (th R ) (¡1:51) (¡1:0 3) (¡1:54 ) (¡1:19) Sum mary statistic s: N 4 4 36 4 4 36 2 W ald Â (d f) 391.97(4 0 ) 376.45 (36) 2 P seud o R 0 .068 0 .065 Notes: 1. T he resultsare m arginale®ec tsc alculated f rom multinom iallogit c oe± c ients.R ob ust t-statistic sofc oe± c ientsinparenthesis. 2 .T he omitted ed uc ationc ategory isprimary ed uc ation. 3.T he c ontrolvariab lesinclud ed ineac h m od elare age,age squared ,f emale, numb er ofc hild ren,engaged inind ivid ualec onom ic ac tivity,hasanad d itional job ,nonm issingw age,nonzero hours,ruraland region(7) d umm ies. 4 .Allc harac teristic sare measured inthe b ase year,19 9 2 .. 33.

(37) T ab le 9.Leavingstate job s(multinom iallogit mod el),19 94 to 199 5. (1) (2 ) (3) Nonstate Nonem pl. Nonstate Nonempl. Nonstate Nonem pl. ¡0 :0 99 ¡0 :0 0 8 U niversity (¡3:11) (¡0 :84 ) ¡0 :0 4 9 0 :0 12 Spec ialsec ond ary (¡1:4 9 ) (0 :38) ¡0 :0 38 0 :0 2 9 G eneralsec ond ary (¡0 :9 5) (1:18) ¡0 :0 10 ¡0 :0 2 3 Supervisory responsib ility (¡0 :68) (¡1:69) ¡0 :10 6 0 :0 0 7 W hite-c ollar oc c upation (¡4 :60 ) (¡0 :2 4 ) 0 :0 0 1 ¡0 :0 0 2 0 :0 0 3 ¡0 :0 16 0 :0 0 1 ¡0 :0 0 2 Hourly w age (th R ) (0 :15) (¡0 :65) (¡0 :12 ) (¡0 :74 ) (0 :0 8) (¡0 :68) Sum mary statistic s: N 19 9 4 199 4 19 9 4 2 W ald Â (d f) 12 1.94 (4 0 ) 10 6.39 (36) 12 3.85 (36) 2 P seud o R 0 .035 0 .036 0 .037 Notes: 1.T he resultsare m arginale®ec tsc alculated f rom multinom iallogit c oe± c ients.R ob ust t-statistic s ofc oe± c ientsinparenthesis. 2 .T he omitted ed uc ationc ategory isprimary ed uc ation. 3. T he c ontrolvariab lesinclud ed ineac h mod elare age, age squared , f em ale, numb er ofc hild ren, engaged inind ivid ualec onom ic ac tivity,hasanad d itionaljob ,nonm issingw age,nonzero hours,rural and region(7) d um m ies. 4 .Allc harac teristic sare measured inthe b ase year,19 9 4 ..

(38) T ab le 10 .Leavingstate job s(multinom iallogit mod el),19 94 to 19 9 5. (1) (2 ) (3) P rivatiz ed J ob move Nonem pl. P rivatiz ed J ob m ove Nonem pl. P rivatized J ob m ove Nonem pl. ¡0 :0 70 ¡0 :0 2 7 ¡0 :0 0 8 U niversity (¡2 :74 ) (¡1:9 6) (¡0 :83) ¡0 :0 63 0 :0 10 0 :0 12 Spec ialsec ond ary (¡2 :16) (0 :4 1) (0 :39 ) ¡0 :0 13 ¡0 :0 2 4 0 :0 2 9 G eneralsec ond ary (¡0 :4 3) (¡1:39 ) (1:19 ) 0 :0 0 4 ¡0 :0 13 ¡0 :0 2 4 Supervisory resp. (¡0 :17) (¡1:14 ) (¡1:70 ) ¡0 :0 9 6 ¡0 :0 0 7 0 :0 0 7 W hite-c ollar oc c . (¡4 :79 ) (¡1:2 2 ) (¡0 :2 4 ) 0 :0 0 1 0 :0 0 1 ¡0 :0 0 2 ¡0 :0 0 1 0 :0 0 1 ¡0 :0 0 3 0 :0 0 1 0 :0 0 1 ¡0 :0 0 3 Hourly w age (th R ) (0 :10 ) (0 :2 5) (¡0 :65) (¡0 :34 ) (0 :37) (¡0 :74 ) (¡0 :0 5) (0 :37) (¡0 :78) Sum m ary statistic s: N 19 9 4 19 94 199 4 2 W ald Â (d f) 173.32 (60 ) 14 6.68 (54 ) 164 .43 (54 ) 2 P seud o R 0 .04 5 0 .04 0 0 .04 5 Notes: 1.T he resultsare m arginale®ec tsc alculated f rom multinomiallogit c oe± c ients.R ob ust t-statistic sofc oe± c ientsinparenthesis. 2 .T he omitted ed uc ationc ategory isprimary ed uc ation. 3.T he c ontrolvariab lesinclud ed ineac h mod elare age,age squared , f em ale, numb er ofc hild ren,engaged inind ivid ualec onomic ac tivity,hasanad d itionaljob ,nonmissingw age,nonzero hours,ruraland region(7) d um mies. 4 .Allc harac teristic sare m easured inthe b ase year,19 9 4 ..

(39) A. E m piric alm ethod ol ogy. T he logit mod elisa stand ard toolinthe estim ationofm od elsw ith a b inary d epend ent variab le.T he b asic d i®erence to linear regressionisa d istrib utionalassum ptionthat resultsinpred ic ted prob ab ilitiesthat lie b etw een0 and 1.Asa result the m od elisestim ated usingthe m aximum likelihood m ethod . Spec i¯c ally,the b inary c hoic e m od elisb ased onanund erlyingunob served variab le yi¤ that variesac rossind ivid ualsi= f1;2 ;:::;N g.T he und erlyingvariab le isd e¯ned as: yi¤ = x0i¯ + "i.It c onsistsofa systematic c om ponent x0i¯ , w here xi are the charac teristic softhe ind ivid ual, and a rand om c om ponent "i. T he rand om c om ponent isassum ed to b e d istrib uted logistic ally w ith E("i) = 0 .2 2 T he choic e b ased onthe und erlyingvariab le c anb e represented b y a b inary variab le: yi =. (. 1 if yi¤ > 0 : 0 if yi¤ ·0. (1). T he prob ab ility ofa m ove isgivenb y: P(yi = 1) = P(yi¤ > 0 ) = ¤ (x0i¯ ), w here ¤ (:) isthe logistic c umulative d istrib utionf unction. T he logit m od elisestim ated b y m aximum likelihood .T he loglikelihood is: lnL =. X. i. [yilnPi + (1 ¡yi)lnPi]. T he ¯rst d erivative is: @ln L X = [yi ¡Pi]xi; @¯ i. 8j= 1;2 ;:::;J. (2 ). (3). T he logit c oe± c ient representsthe e®ec t ofa change inthe ind epend ent variab le onthe log-od d s.T he m arginale®ec t is: @E(yi) = [Pi(1 ¡Pi)]¯ @xi 22. (4 ). Itis possibletointerprettheunderlyingvariable as the unobserved utility ofan employmentstate.T hechoiceofemploymentstatethenismadebasedonutilitymaximization,anddecision toleaveis takenonceathresholdforutilityinthedestination stateis abovetheutility in theoriginalstate.. 36.

(40) Notic e that f or d um my variab lesthe m arginale®ec t ref ersto ane®ec t onthe prob ab ility ofa change f rom 0 to 1. T he good nessof¯t ofthe logit m od elisevaluated usingthe pseud o-R 2 d erived f rom the likelihood ratio and the likelihood ratio test ofrestric ting allslope c oe± c ientsto zero (G reene, 19 9 8). T he pred ic ted prob ab ilitiesreported inthe stud y are c alculated using the method ofrec yc led pred ic tions. T he method involvesc alculatingthe pred ic ted prob ab ilityf or each sub group usingthe w hole sam ple instead ofonly the sub sam ple inquestion.For exam ple,in c alculatingthe pred ic ted prob ab ility f or those w ith university ed uc ation, Iuse the charac teristic softhe w hole sam ple instead ofonly those w ith university ed uc ation.T he d i®erencesinpred ic ted prob ab ilitiesthengive the d i®erence d ue to universityed uc ationhold ingother c harac teristic sof the sample c onstant (f or d isc ussionsee pp.4 0 6-4 0 7inStata Corporation, 19 9 9 ). T he multinomiallogit m od elisa generalizationofthe logit m od elto multiple statesw ith anad d itionalassum ptionofind epend ence b etw een the states. T he errors ofthe und erlying variab le are assum ed to b e 23 ind epend ently and id entic ally d istrib uted w ith a W eib ulld istrib ution. T henthe prob ab ility ofc hoic e k f or ind ivid uali and a set ofchoic es j+ 1 = f0 ;1;2 ;:::;Jg is: 0. e ¯ kxi P(yi = k) = P J ¯ 0xi j j= 0 e. (5). Inord er to id entif y the c oe± c ientsa norm alizationisnec essary.T hisis ac hieved b y setting¯ 0 = 0 ,i.e.estim atingprob ab ilitiesw ith respec t to a b ase c ategory.W ith thisnorm alization,the prob ab ilitiesare: he W eibull distribution is given by: F ("ij) = exp(e¡"ij). T he undesirable side-e®ect of the assumption is the irrelevance of the third choice when a choice between two states is made, the so-called Irrelevance of Independent A lternatives (IIA )assumption.Clearly,theIIA assumption is apriori unacceptablein thecaseof choice between employmentstates.H owever, since the multinomiallogitmethod is hereused fordescriptivepurposes only this problem is setaside. 23 T. 37.

(41) 0. P(yi = P(yi =. e ¯ kxi k) = P 0x ; ¯j i 1+ J e j= 1 1 0)= PJ 0 1 + j= 1 e ¯ jxi. 8 j= 1;2 ;:::;J. (6) (7). T he multinom iallogit m od elisestim ated b y m aximum likelihood .T he loglikelihood is: lnL =. X XJ. d ijlnPij. (8). i j= 0. W here d ij isanind ic ator that takesonvalues1 or 0 ifalternative jis c hosen.T he ¯rst d erivative is: @lnL X = [d ij¡Pij]xi; @¯ j i. 8 j= 1;2 ;:::;J. (9 ). T he estim ationofanmultinomiallogit mod elresultsinc oe± c ient estim ates¯ j f or each choic e relative to a b ase c ategory.T he marginale®ec ts are givenb y: 0. 1. X @E(yij) = Pj@ ¯ j¡ Pj¯ jA @xi j. (10 ). G ood nessof¯t measuresand the m ethod ofc alculating pred ic tionsare the sam e asf or the logit m od elab ove (G reene,19 9 8).. 38.

(42)