WAGE ARREARS AND INEQUALITY IN THE DISTRIBUTION OF PAY: LESSONS FROM RUSSIA HARTMUT LEHMANN 1 AND JONATHAN WADSWORTH 2 * January 2006 1. University of Bologna; IZA, Bonn; CERT, Heriot-Watt University, Edinburgh 2. Royal Holloway College, University of London; Centre for Economic Performance, LSE; and IZA, Bonn * Corresponding author: Jonathan Wadsworth Economics Department Royal Holloway College, University of London Egham United Kingdom TW20 0EX E:mail: j.wadsworth@rhul.ac.uk Tel: (00 44 0)1784 443464 The authors are grateful to John DiNardo and Jochen Kluve for making their STATA routines available; to Boris Augurzky, Todd Idson, Alan Manning, Mark Schaffer, Christoph Schmidt, Jan Svejnar, Paul Walsh, and two anonymous referees, participants at the CEPR-WDI Conference on Transition in Moscow as well as seminar participants at the universities of Heidelberg, Heriot-Watt University, the London School of Economics, the University of Trento and the WDI, University of Michigan for valuable comments. The Fritz Thyssen Foundation provided financial support within the project "Economic Reform and the Microeconomics of Labor Market Adjustment in the Russian Federation." The authors are also grateful to IZA for providing the facilities for the authors to undertake research on this paper.