The Relationship between Labor Productivity and Salary Return: An Empirical Analysis on Russian Regional Data

Abstract

The article deals with dynamics and differentiation of labor productivity and salary return in the Russian Federation in the period 2012–2020, as well as the relationship between these indicators. The study is based on Russian regional data published by Rosstat in the Unified Interdepartmental Information and Statistical System (EMISS). The theoretical section of the article discusses the mechanisms responsible for the dynamics of labor productivity and salary return, as well as for the correlation between these indicators, including technological development, the sectoral structure of the regional economy and local labor market characteristics. Calculations have shown that both labor productivity and salary return in the regions of Russia in the period under review have positive dynamics and significant regional variation. However, most of this variation is due to the presence of four regions in which the studied indicators show levels several times higher than the values in the bulk of the regions: Nenets Autonomous Okrug, Yamalo-Nenets Autonomous Okrug, Khanty-Mansi Autonomous Okrug, Sakhalin Oblast. In our opinion, the leadership of these regions is due to the predominance of the extractive industry in their sectoral structure, characterized by a high level of capital intensity and a low level of labor intensity. The analysis of the number of employed and the number of hours worked shows a negative trend and a significant variation by region, which can serve as a factor of high interregional differentiation of labor productivity and salary return. Correlation analysis of the average over the period of labor productivity and salary return indicates the absence of a significant relationship between the studied indicators when excluding atypical observations from the analysis.