Abstract
So far little is known about how private sector earnings in Russia compare to those in the still strong government sector. This paper estimates sectoral earnings equations for rural and urban men and women which control for: (1) Self-selection into the workforce; and (2) Self-selection into either the private or government sector, while allowing for simultaneity in the selection decisions. The selection controls are found to have a considerable effect on the estimated sectoral earnings differentials for all four sample groups. Earnings differentials are examined by age, education, and unobserved skill. Expected earnings are found to be higher in the private sector for most groups.