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Labor market segmentation: the case of Ukraine and Russia


Serhiy, Stepanchuk (2003). Labor market segmentation: the case of Ukraine and Russia. Master's thesis / Doctoral dissertation.


This paper explores the issue of labor market segmentation in the transitional economies of Ukraine and Russia. It utilizes the switching regression analysis test for the existence of two seperate wage-setting mechanisms in these two labor markets, as predicted by the dual labor market hypothesis. The estimated results suggest that Ukrainian labor market is better explained in the terms of dual labor market model. At the same time, the results for Russia are more ambiguous, since the difference between the two segments is less pronounced. Recognizing that the switching regression results are equivalent to assuming some peculia heteroscedatstic distribution of the error term, the model is subjected to the goodness of fit test, and is compared to a single-equation specification which assumes complex heteroscedastic nature of the errors along the lines of predicting the actual wage distribution. Furthermore, the results are subjected to a sensitivity analysis, which suggests that they are robust to variations in model specification.


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Serhiy, Stepanchuk