The Daily Stat from Harvard Business Review

July 13, 2015 In Russia, Wages Are Not What They Appear to Be In a study of employees in Russia, researchers compared people whose car-ownership data implied that their earnings were the same and found that those working for foreign-owned firms earned, on the books, 4 times more than those working for domestic private firms. The explanation? The data, from 1999–2003, suggests that the Russian firms hid large portions of employees’ compensation, say Serguey Braguinsky of Carnegie Mellon and Sergey Mityakov of Clemson University. Workers often receive unreported income in the form of cash so that both the firm and its employees can avoid taxes and circumvent regulations. The presence of foreign-owned firms has the potential to curb this practice, the researchers say. SOURCE: Foreign corporations and the culture of transparency: Evidence from Russian administrative data

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