Wage Determination in Rural Russia: A Stochastic Frontier Model

Annotation
The paper examines the structure of Russia’s rural wages at the end of the first decade of transition using data from a nationally representative household survey. The stochastic frontier model is applied to obtain consistent wage equation coefficient estimates and capture labor market imperfections that are found to be an essential factor of wage determination. Mean hourly wages do not differ by gender, but women’s greater endowments in human capital suggest possible discrimination. The wage structure is highly gender specific. Education yields significant returns for women, while for men experience is more important. Local cost of living is a major determinant of wages. Workers’ private plots exert significant influence on the rural labor market.