Market Transition, Employment,
and Income in Russia, 1991-1995
Theodore P. Gerber and
Michael Hout
CCOP Working Paper #1999-03
January, 1999
We assess 14 predictions
from market transition theory using survey data on employment,
earnings, and income in Russia, during the first five years of
market reform. Although the private sector has grown, self-employment
is still rare. Incomes are down, and unemployment is up. Some
entrepreneurs and managers have achieved dramatic success, while
most Russians have steadily lost ground to hyper-inflation. The
upshot is a distended income distribution and unprecedented income
inequality. Distinctive features of late Soviet-era stratification
persist: low returns to education, a gender gap in earnings, and
low earnings among professionals. The Russian market transition
offers more opportunity in trade, consumer services, and speculation
and fewer in manufacturing than do other emerging markets. This
dynamic corresponds to the image of "merchant capitalism" and
contradicts the predictions of market transition theory.
