National labour market rigidities during the period of the structural transformation of the economy: unknown opportunities arising from the known datasource
Julia Krotova, Henry Penikas
Labour market rigidity started attracting additional attention from the central banks all over the world. This is why, it might be worth expanding the set of indicators describing the phenomenon. In particular, herein we offer an extra indicator — elasticity of substitution in-between professions. We econometrically estimate the parameter assuming the constant elasticity of substitution (CES) production function. To do so, we solicit the unique dataset spanning through half a year (since December 2024 to May 2025), which comprises of 1,2 m job postings in Russia. For convenience of analysis, we condense the extensive list of 170 professions into 14 aggregate jobs. By running over 90 regressions we conclude that the national labour market is rigid as the average elasticity of substitution is negative (-16), i.e., professions on average act as complements to each other (not substitutes). This corresponds to the CES-function parameter of ρ ≈ +1,1. We recommend using it in the production functions in the CGE and DSGE models. Based on our model parameter estimates, we claim that at least since December 2024 major challenges come from the blue collar jobs; professions related to security, non-hard physical jobs, as we do not find options for them to be substitutable with people from other roles. Due to obtained parameter estimates, we also register geographical evolution of labour rigidity by pairs of professional roles. For instance, for the IT specialists we observe increase in labour market flexibility with respect to other roles when approaching the capital and when being closer to more densely populated regions. By periodic review of the suggested indicator of labour substitution elasticity, we may capture the structural break points in the evolution of the national labout market rigidity. This will enrich the information set considered when making monetary policy decisions.