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How much unemployment is needed for restructuring? The Russian experience

Layard, Richard and Richter, Ansgar (1995) How much unemployment is needed for restructuring? The Russian experience. CEP Discussion Papers, CEPDP0238. Centre for Economic Performance, London School of Economics and Political Science, London, UK.

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Identification Number: CEPDP0238

Abstract

Open unemployment in Russia has been growing very slowly - by only about 1 percentage point a year. This is mainly because of a degree of wage flexibility unknown in the West. Comparing industries over a two year period we find that, if relative employment fell by 10%, relative wages fell by 24%. Redundancies have been very low - only 1.5% of the work force in 1993. There has, however been a substantial redeployment of labour job to job movement - with a hiring rate of 21% of the workforce in 1993. The paper then discusses the reasons for this wage flexibility - in terms of the unemployment aversion of workers and the financial and other incentives facing managers. Finally, it appraises the ''Russian way'' and argues that it is better than having large-scale open unemployment, provided the under-employed workers kept in enterprises do not impede the internal restructuring of the enterprises.

Item Type: Monograph (Discussion Paper)
Official URL: http://cep.lse.ac.uk/_new/publications/series.asp?...
Additional Information: © 1995 The Authors
Subjects: H Social Sciences > HD Industries. Land use. Labor
Sets: Departments > Economics
Collections > Economists Online
Research centres and groups > Centre for Economic Performance (CEP)
Series: Working Papers > CEP Discussion Papers
Date Deposited: 12 Aug 2013 11:22
Last Modified: 12 Aug 2013 11:22
URI: http://eprints.lse.ac.uk/id/eprint/51643

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