0
Inequality in Total Returns to
Work in Ukraine:
Taking a closer look at workplace
(dis)amenities
Olena Nizalova
University...
Acknowledgements
Importance of the Matter
- Work brings major part of income, but takes major
part of our time
- ILO “Decent Work Agenda”
-...
Policy Motivation
- Significant increase in wage inequality in Ukraine after
the collapse of the Soviet Union, stable afte...
Academic Motivation
- Most studies focus on monetary compensation to
work
- Some research interest on inequality in other ...
Research Question
Contribution to the literature
- Application of the multidimensional poverty/inequality
methodology to the new area
- Firs...
Clarifications
Disamenities
- Risk of on the job injury
- Duration of injury
- Number of shifts
Amenities
- Provision/subs...
Findings
Establishments paying higher wages tend to
- provide safer and, in general, better working
conditions
- less like...
Findings
Over the period from 1994(6) to 2004
- Move away from risks concentrated at the top end
of distribution to equal ...
Findings
Explanations?
- Changes in the concentration of firms size, export
status, Energy, Food processing and Light indu...
Data
Ukrainian Labour Flexibility Survey
1996, 1998, 2000, 2002, 2004
longitudinal representative survey of Ukrainian
indu...
Theory/Methodology
- Compensating Wage Differentials (Extension of
Rosen’s theory by Hammermesh): Income vs.
Substitution ...
500
10001500200025003000
1990 1995 2000 2005 2010
Real Monthly Wage
12345
1990 1995 2000 2005 2010
Work Accidents
.06.08
....
0
10002000300040005000
1990 1995 2000 2005 2010
ULFS ULFS, energy
ULFS, processing Derzhkomstat, overall
Derzhkomstat, ind...
.4.6.8
1
1.21.4
1994 1996 1998 2000 2002 2004
Relative Wage by Quartiles
123456
1994 1996 1998 2000 2002 2004
accidents
1
...
0
.2.4.6.8
1
C(p)
0 .2 .4 .6 .8 1
Percentiles (p)
1995
0
.2.4.6.8
1
C(p)
0 .2 .4 .6 .8 1
Percentiles (p)
1999
0
.2.4.6.8
1...
0
.2.4.6.8
1
C(p)
0 .2 .4 .6 .8 1
Percentiles (p)
1994
0
.2.4.6.8
1
C(p)
0 .2 .4 .6 .8 1
Percentiles (p)
1995
0
.2.4.6.8
1...
CI Time Dynamics
1995-2004 1995-1999 1999-2002 2004-2002
Total Injury Burden -0.5916** -0.1927* -0.0229 -0.3760**
(0.0573)...
Araar’s Hybrid MDI
Multidimensional Inequality Estimates (lambda=0.5)
Total (MDI) 0.1215 0.1562 0.1081 0.0891
Relative con...
Araar’s Hybrid MDI: Issues
• Disamenities – “bads”, not “goods”
• How to combine “goods” and “bads” in one index?
• Transf...
Summary Statistics
1995 1999 2000 2002 2004
Wages 3.57 8.86 44.29 15.32 13.71
Incidence of Injuries per 100 FTE 1.04 0.81 ...
Conclusions
• Wage inequality has not been growing in Ukraine, while
inequality in non-monetary workplace (dis)amenities h...
Thank you
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Inequality in Total Returns to Work: Taking a Closer Look at Workplace (Dis)amenities in Ukraine

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This paper examines the importance of non-monetary dimensions of work in studies of overall compensation inequality. Relying on the methodological advances in the
field of multidimensional inequality and using the representative sample of Ukrainian industrial establishments over the period from 1994 to 2004, we show that the focus on monetary compensation is too narrow. It ignores significant dynamics of inequality in workplaces. Analysis of such workplace conditions as risk of on the job injury, various benefits/amenities, and insecurities with wage payments, shows that the inequalities in these conditions do exacerbate inequalities in hourly wages. Workers in establishments paying highest hourly wages have enjoyed relatively greater reductions in the total workplace injury burden, greater retention of various benefits/ amenities, and relatively larger increases in wage payment security (decreased wage arrears), compared to the workers in the lowest paying establishments. These findings present an important lesson for further research on inequality inasmuch as a narrow focus on wages actually disguise the growing inequality in overall returns to work, as well as considerable implications for the development of social policies.

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  • This project has been supported by ERSTE Foundation through its Fellowship for Social Research
  • Does the inequality in non-monetary workplace conditions exacerbate the inequality in monetary work compensation in Ukraine?
  • Transcript of "Inequality in Total Returns to Work: Taking a Closer Look at Workplace (Dis)amenities in Ukraine"

    1. 1. Inequality in Total Returns to Work in Ukraine: Taking a closer look at workplace (dis)amenities Olena Nizalova University of Kent Kyiv School of Economics 30th May, 2014
    2. 2. Acknowledgements
    3. 3. Importance of the Matter - Work brings major part of income, but takes major part of our time - ILO “Decent Work Agenda” - Inequality in working conditions => Inequality in Income => Inequality in future generations - Colleagues – most important reference group in transition countries
    4. 4. Policy Motivation - Significant increase in wage inequality in Ukraine after the collapse of the Soviet Union, stable after 1995 - Anecdotal evidence of worsening of working conditions for low wage workers - Movement away from the workplace centered model of provision of social goods accompanied by the severe crisis across all dimensions of well-being (health, education, recreation, sports, housing, etc.)
    5. 5. Academic Motivation - Most studies focus on monetary compensation to work - Some research interest on inequality in other job characteristics: risk of injury, parental leave, health insurance, night shifts, inconvenient hours, other benefits - But no study since Hammermesh (1999) exploring multiple dimensions of the total returns to work
    6. 6. Research Question
    7. 7. Contribution to the literature - Application of the multidimensional poverty/inequality methodology to the new area - First attempt to measure inequality in workplace (dis)amenities and study its time dynamics in Ukraine - Documents the degree of the unequal shift away from work-centered provision of social services - Highlights importance of further methodological developments towards multi-dimensional measure of inequality in total returns to work
    8. 8. Clarifications Disamenities - Risk of on the job injury - Duration of injury - Number of shifts Amenities - Provision/subsidization of housing, kindergardens, meals; rest houses, paid health expenditures, (interest-free) loans, assistance on retirement, supplement pension, training, transportation
    9. 9. Findings Establishments paying higher wages tend to - provide safer and, in general, better working conditions - less likely to experience difficulties paying wages, and lower probability of having severe wage arrears - more likely to have amenities and in a variety of dimensions
    10. 10. Findings Over the period from 1994(6) to 2004 - Move away from risks concentrated at the top end of distribution to equal distribution of risks - Move from equal distribution in provision of amenities to such that favors top end of the wage distribution - Similar dynamics across all workplace characteristics available in the data (not driven by one particular amenity or group of those)
    11. 11. Findings Explanations? - Changes in the concentration of firms size, export status, Energy, Food processing and Light industries towards the lower end of wage spectrum - Not related to shares of blue collar workers or female workers - Does it Matter?
    12. 12. Data Ukrainian Labour Flexibility Survey 1996, 1998, 2000, 2002, 2004 longitudinal representative survey of Ukrainian industrial enterprises which provides comprehensive information on average characteristics of the firms, including wages, workforce, injuries, working time, shifts, various amenities.
    13. 13. Theory/Methodology - Compensating Wage Differentials (Extension of Rosen’s theory by Hammermesh): Income vs. Substitution effects - Descriptive comparison of various workplace characteristics across wage quartiles/deciles - Distributive Analysis using STATA Package (DASP) - Non-parametric Lowess Estimation - Araar’s (2009) multidimensional inequality index
    14. 14. 500 10001500200025003000 1990 1995 2000 2005 2010 Real Monthly Wage 12345 1990 1995 2000 2005 2010 Work Accidents .06.08 .1 .12 1990 1995 2000 2005 2010 Fatal Work Accidents 05 101520 1994 1996 1998 2000 2002 2004 SD Log(Wage) .35 .4 .45 .5 .55 1994 1996 1998 2000 2002 2004 SD Adj Log(Wage) .4.6.8 1 1.21.4 1994 1996 1998 2000 2002 2004 Qrt2 Qrt3 Qrt4 Relative Wage by Quartiles
    15. 15. 0 10002000300040005000 1990 1995 2000 2005 2010 ULFS ULFS, energy ULFS, processing Derzhkomstat, overall Derzhkomstat, industry Derzhkomstat, processing industry Derzhkomstat, Energy-gas-water Monthly Real Wage, 2012 UAH
    16. 16. .4.6.8 1 1.21.4 1994 1996 1998 2000 2002 2004 Relative Wage by Quartiles 123456 1994 1996 1998 2000 2002 2004 accidents 1 1.5 2 2.5 3 1994 1996 1998 2000 2002 2004 duration .5 1 1.5 2 2.5 1994 1996 1998 2000 2002 2004 total_injuries Qrt2 Qrt3 Qrt4 0 .2.4.6.8 1 L(p) 0 .2 .4 .6 .8 1 Percentiles (p) 1994 0 .2.4.6.8 1 L(p) 0 .2 .4 .6 .8 1 Percentiles (p) 1995 0 .2.4.6.8 1 L(p) 0 .2 .4 .6 .8 1 Percentiles (p) 1999 0 .2.4.6.8 1 L(p) 0 .2 .4 .6 .8 1 Percentiles (p) 2002 0 .2.4.6.8 1 L(p) 0 .2 .4 .6 .8 1 Percentiles (p) 2004 45° line wagehat
    17. 17. 0 .2.4.6.8 1 C(p) 0 .2 .4 .6 .8 1 Percentiles (p) 1995 0 .2.4.6.8 1 C(p) 0 .2 .4 .6 .8 1 Percentiles (p) 1999 0 .2.4.6.8 1 C(p) 0 .2 .4 .6 .8 1 Percentiles (p) 2002 0 .2.4.6.8 1 C(p) 0 .2 .4 .6 .8 1 Percentiles (p) 2004 45° line TOTINJ
    18. 18. 0 .2.4.6.8 1 C(p) 0 .2 .4 .6 .8 1 Percentiles (p) 1994 0 .2.4.6.8 1 C(p) 0 .2 .4 .6 .8 1 Percentiles (p) 1995 0 .2.4.6.8 1 C(p) 0 .2 .4 .6 .8 1 Percentiles (p) 1999 0 .2.4.6.8 1 C(p) 0 .2 .4 .6 .8 1 Percentiles (p) 2002 0 .2.4.6.8 1 C(p) 0 .2 .4 .6 .8 1 Percentiles (p) 2004 45° line amenities
    19. 19. CI Time Dynamics 1995-2004 1995-1999 1999-2002 2004-2002 Total Injury Burden -0.5916** -0.1927* -0.0229 -0.3760** (0.0573) (0.0920) (0.1040) (0.0751) Amenities Score 0.0734** 0.0225* 0.0224 0.0286+ (0.0132) (0.0117) (0.0165) (0.0176) Wage Arrears -0.3802** -0.0414 -0.1432* -0.1956** (0.0502) (0.0522) (0.0700) (0.0685)
    20. 20. Araar’s Hybrid MDI Multidimensional Inequality Estimates (lambda=0.5) Total (MDI) 0.1215 0.1562 0.1081 0.0891 Relative contribution of: Wages 9.57% 40.63% 13.98% 22.15% Total Safety Level 3.48% 0.93% 6.12% 0.76% Amenities Score 26.65% 31.15% 37.34% 50.29% Absence of Wage Arrears 60.31% 27.29% 42.56% 26.80%
    21. 21. Araar’s Hybrid MDI: Issues • Disamenities – “bads”, not “goods” • How to combine “goods” and “bads” in one index? • Transformation? • E.g. Injury burden close to zero, but “safety=1-normalized injury burden” – close to 0.99 => no observed difference between Concentration Curve and 45 degree line • Equality is assumed to be a virtue, but do we want equality in risks, shift work, etc.? • More work needed, for now – study dimension by dimension
    22. 22. Summary Statistics 1995 1999 2000 2002 2004 Wages 3.57 8.86 44.29 15.32 13.71 Incidence of Injuries per 100 FTE 1.04 0.81 0.59 0.61 0.40 Duration per Injury 3.10 3.80 3.35 3.16 1.73 Total Injury Burden per 100 FTE 3.32 2.96 1.99 1.99 0.58 Number of shifts per day 2.15 2.28 2.13 2.17 2.17 Total working hours 33.72 33.20 33.92 35.85 36.97 Amenities Score 9.49 7.61 7.84 7.66 7.40 Difficulty paying wages 0.71 0.76 0.63 0.43 0.20 Wage Arrears 0.42 0.39 0.27 0.28 0.15 No observations 507 660 773 1327 1945
    23. 23. Conclusions • Wage inequality has not been growing in Ukraine, while inequality in non-monetary workplace (dis)amenities has been growing significantly • Growth of inequality observed through the whole spectrum (dis) amenities • Need for further methodological developments to assess inequality in total returns to work in one measure • Documented movement away from the workplace-centred provision of social services requires relevant policy response from the government
    24. 24. Thank you
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