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Russian human capital: devaluation or development? (Three essays on human capital reallocation during the transition to a market economy)


Peter, Klara Sabirianova (2000). Russian human capital: devaluation or development? (Three essays on human capital reallocation during the transition to a market economy). Master's thesis / Doctoral dissertation.


This dissertation employs the Russian Longitudinal Monitoring Survey, a nationwide panel, to inquire into the magnitude, determinants, and consequences of human capital reallocation in transitional Russia. We examine changes in the qualitative structure of Russian human capital during the first decade of reforms, with a special emphasis on occupational mobility. This study shows that the restructuring process increases the rate of occupational reallocation. Structural changes account for a substantial part of the increase in gross occupational flows. A model of occupational switching built in the dissertation outlines the major explanatory factors of increased occupational mobility during the transition to a market economy. In contrast to developed market economies where occupational mismatching and career development reasons play a substantial role in explaining occupation mobility, we demonstrate that transition economies bring structural factors into play. Further we analyze two competing explanations of increased occupational mobility, one "destructive" (the destruction of existing jobs and occupations) and one "creative" (the creation of new opportunities) and show that both explanations are taking place in Russia. The dissertation also presents a dynamic matching equilibrium model describing the changes in occupational structure and the transitional dynamics to new market-oriented jobs. This model incorporates several new elements, including endogenous skill composition of employment and unemployment, retraining costs, probability of successful retraining, and depreciation of new skills. The model derives the optimal paths of changes in job and skill composition depending on various parameters such as labor demand conditions, retraining costs, search activity, bargaining power, etc. We show that the transition process itself does not guarantee a unique path of human capital reallocation. The results, directions, and the speed of changes in job and skill composition largely depend on the institutional and economic environment. Our empirical analysis attempts to determine conditions under which the creation of new-type jobs is the most likely. While this research is undertaken for one country, the conclusions are relevant for other emerging and transition markets where structural and technological changes cause substantial reallocation of human capital.

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Peter, Klara Sabirianova