Returns to human capital investment in a transition economy

Abstract

Russia has undergone tumultuous changes during the transition process. This has been nowhere more evident than within the labour market. The transition has now progressed to such an extent that it is possible to examine whether the issues of a re‐capitalisation and restructuring of human capital have been addressed. This paper uses the Russian Longitudinal Monitoring Survey to assess rates of return to human capital investments for the years 1994‐1998. It utilises standard earnings functions to assess the returns to education as well as to specific levels of post‐compulsory education and training. This article places specific emphasis on firm level training and the role of the firm, for the purpose of this special issue. Results suggest, in the case of Russia, that significant and positive returns to education and training exist comparable in magnitude to those in other transition countries.

Understanding the human capital benefits of a government-funded international scholarship program: An exploration of Kazakhstan's Bolashak program

“…In a centrally-planned economy, the correlation between education and earnings is typically smaller, as governments in these economies determine the distribution of workers across industries and set wages based on criteria other than supply and demand (Arabsheibani and Mussurov, 2007); these economies also tend to have egalitarian wage structures (Clark, 2003). Although the labor markets of many newly independent states experienced profound disruption immediately following the dissolution of the Soviet Union (Abrahart, 2000), the tenets of human capital theory now appear to hold.…”

Work-related Attitudes, Values and Radical Change in Post-Socialist Contexts: A Comparative Study

“…Similarly, the traditional methods and direction of education and training in the FSU dominated countries were based upon the demands created by the centralised control-led system of public sector employment. (Clark, 2003), with the corollary that the educational and training backgrounds of many workers within these countries today, differ significantly from the educational and training backgrounds of workers in countries such as the USA and the UK.…”

Higher Education Internationalization in the Context of Ongoing Economic-Political Transitions: Insights from Former Soviet and Eastern Bloc Nations

“…These nations all underwent major economic and political transitions following the dissolution of the Soviet Union in the 1990s and have since been transitioning from a centrally-planned economy to a market economy. Education and earnings are typically positively correlated, but the relationship tends to be smaller in centrally planned economies than in market economies because governments in centrally planned economies determine the distribution of workers across industries based on criteria other than supply and demand (Arabsheibani & Mussurov, 2007) and because centrally planned economies tend to have egalitarian wage structures (Clark, 2003). With the restructuring of national labor markets that followed the dissolution of the Soviet Union, many former Soviet and Eastern bloc nations experienced periods of high unemployment (e.g., Abrahart, 2000;Rashid & Rutkowski, 2001).…”

“…In addition to population size, land area, geographic location, religious and ethnic composition, and history of national sovereignty, nations of the former Soviet Union and Eastern bloc also differ in economic competitiveness. The positive correlation between education and earnings increased in former Soviet and Eastern bloc nations immediately after independence (e.g., Arabsheibani & Mussurov, 2007;Chase, 1998;Clark, 2003;Münich, Svejnar & Terrell, 2005), but the magnitude of the increase in returns to human capital varied among former Soviet and Eastern bloc nations (Newell & Reilly, 1999;Flabbi, Paternostro & Tiongson, 2007). The World Economic Forum now classifies the economies in most nations in the former Soviet and Eastern bloc cluster as "transitional" (Schwab, 2015).…”