Working Paper: CEPR ID: DP1224
Authors: Daniel Cohen
Abstract: The paper analyses the transition in Russia through a theoretical model in which job-to-job mobility plays a crucial role. It shows that job-to-job mobility is a key factor preventing a discontinuous break in unemployment and insulating wages in declining sectors from aggregate disequilibria. In the case where the mafia can impose a tax on entry, it shows that a range of inefficient sectors can be kept indefinitely alive. In this case the spectrum of wages remains wide and will never reach perfect equalization as promised by laissez-faire.
Keywords: Russia; Transition; Job-to-job mobility; Mafias
JEL Codes: P1; P2
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Job-to-job mobility (J62) | unemployment spikes (J64) |
| Job-to-job mobility (J62) | economic shocks (F69) |
| economic shocks (F69) | unemployment spikes (J64) |
| mafia's tax on entry (H27) | persistence of inefficient sectors (L52) |
| persistence of inefficient sectors (L52) | wider wage distribution (D39) |
| liquidity constraints (E41) | impede hiring (J71) |
| liquidity constraints (E41) | maintain inefficient sectors (L52) |