Non‐Wage Benefits, Costs of Turnover and Labour Attachment

24 Pages Posted: 16 Dec 2011

See all articles by Tuuli Juurikkala

Tuuli Juurikkala

Bank of Finland

Olga Lazareva

National Research University Higher School of Economics

Date Written: January 2012

Abstract

Like firms in established market economies, many Russian firms provide non‐wage benefits to their workers, such as housing, medical care or day care. This article explains the provision of benefits as a strategic choice for firms in the presence of labour and service market imperfections. Analysing unique survey data for 404 industrial establishments from 40 Russian regions, the authors provide strong evidence that non‐wage benefits are used by firms to attach workers and thereby reduce the costs of labour turnover in the face of tight labour markets. It is also shown that this attachment strategy works due to imperfections in the regional markets for social services.

Keywords: Non‐wage benefits, labour turnover, labour attachment, Russia

JEL Classification: J32, J33, J42, J63, M52, P31

Suggested Citation

Juurikkala, Tuuli and Lazareva, Olga, Non‐Wage Benefits, Costs of Turnover and Labour Attachment (January 2012). Economics of Transition, Vol. 20, Issue 1, pp. 113-136, 2012, Available at SSRN: https://ssrn.com/abstract=1973460 or http://dx.doi.org/10.1111/j.1468-0351.2011.00426.x

Tuuli Juurikkala (Contact Author)

Bank of Finland ( email )

P.O. Box 160
FIN-00101 Helsinki
Finland

Olga Lazareva

National Research University Higher School of Economics ( email )

Myasnitskaya street, 20
Moscow, Moscow 119017
Russia

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