Dynamics and Drivers of Earned Income in Regions of Russia

Abstract

Econometric models for earned incomes per Russia’s regions are constructed. Impacts of capital-labor ratio, human capital and innovative technologies on earned incomes are evaluated. Capital-labor ratio is calculated as fixed assets value divided by amount of manpower employed. Human capital is evaluated in terms of average time of training in the education system. Implementation of innovation technologies is assessed in terms of proportion of usable (not wornout) fixed assets value. The models constructed can account for up to 70 per cent of remuneration of labor. The models are constructed based on crosssectional data by regions for the period of 2008–2012. It is found that the effect of capital-labor ratio on remuneration generally diminishes, while it showed temporal increase in 2010. The effect of human capital on remuneration also diminished. Nevertheless, in 2009, in the midst of severe slump human capital did acutely, while temporally, increased its effect on remuneration of labor. The impact of innovative technologies on labor remuneration shows growth, with the exception of 2011, when the impact took plunge. For the period examined the authors identify general trends of diminishing the effects of capital-labor ratio and human capital of manpower employed on the level of labor remuneration. The effect of innovation technologies, on the contrary, increases. The general trend of capital-labor ratio effectiveness diminishing can be reasoned by growing wearing out of fixed assets. Given the high educational level of manpower employed in this country and insufficient level of innovation technologies implementation, the defined trends in shifting the effects of the said drivers can be explained by the known effect of production drivers interplay.