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This paper explores the issue of labor market segmentation in the transitional economies of Ukraine and Russia. It utilizes the switching regression analysis to test for the existence of two separate wagesetting mechanisms in these two labor markets, as predicted by the dual labor market hypothesis. The estimated results suggest that Ukrainian labor market is better explained in the terms of dual labor market model. At the same time, the results for Russia are more ambiguous, since the difference between the two segments is less pronounced.
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