Working Paper: CEPR ID: DP6621
Authors: Marcus Miller; Jennifer C. Smith
Abstract: An ?efficiency wage? model developed for Western economies is reinterpreted for Soviet Russia assuming that it was the Gulag not unemployment that acted as a ?worker-discipline device?. Archival data now available allows for a basic account of the dynamics of the Gulag to be estimated. When this is combined with a dictatorship wishing to maximise the ?investible surplus? subject to an efficiency wage incentive constraint, what does it imply? That to secure resources for investment or war, consumption must be compressed; and making the Gulag harsher helps reduce incentive problems in the workplace. This is the cruel logic of coercion. But this economic rationale for the Gulag does not, we find, encompass randomised mass terror. Why did Stalin?s system of coercion ultimately fail? The paper concludes with comparisons of Western and Soviet systems from an efficiency wage perspective.
Keywords: Asymmetric Information; Efficiency Wage; Labour Discipline; Soviet Gulag
JEL Codes: D82; P23; P26; P27
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| harsher gulag conditions (P37) | reduce incentive problems in the workplace (M52) |
| harsher gulag conditions (P37) | maintain worker productivity (J29) |
| harsher gulag conditions (P37) | lower efficiency wage (J31) |
| lower efficiency wage (J31) | increase investible surplus for the state (E22) |
| gulag's harshness (P37) | efficiency wage dynamics (J31) |
| random application of terror (H84) | undermine productivity (O49) |
| gulag as a tool for short-term discipline (P37) | systemic inefficiencies in the Soviet economy (P35) |