Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/223800
Authors: 
Ananyev, Mikhail
Dohmen, Thomas
Lehmann, Hartmut
Year of Publication: 
2020
Series/Report no.: 
IZA Discussion Papers No. 13358
Abstract: 
Deferred payments, as implicit contracts, are predicted to bind workers to firms as long as workers believe that firms adhere to these implicit contracts. We employ a unique personnel data set from a Russian manufacturing firm to investigate whether wage arrears, delayed payments of wages, induce bonding effects. We find that workers' separation rates decrease dramatically when workers experience wage arrears, providing evidence for the bonding effects of deferred compensation schemes. After workers are repaid nominal wages, but have suffered real wage losses due to unexpectedly high inflation, we observe that workers affected by wage arrears again become much more likely to separate during and after the repayment period of a second episode of wage arrears, providing evidence for the weakening of the bonding effect after the firm's reputation for adequately compensating for deferred payments has been jeopardized.
Subjects: 
deferred compensation
worker turnover
wage arrears
personnel data
Russia
JEL: 
J30
J63
M52
P23
Document Type: 
Working Paper

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