This paper considers institutional problems associated with human capital return on the Russian labor market.The relevance of the research is associated with low returns on human capital on the Russian labor market and the need to create institutional conditions favorable to unlocking the creative potential of an employee.Research Methods. In this paper the author relies on the institutional approach to analyze the institutional system and its impact on the labor market, identifying the main barriers that impede the return on human capital.The quality of the institutional system is a critical factor in choosing the direction and speed of economic processes. This fact is confirmed by the role and importance of institutions, which form the basis for global foreign studies of the state of national economies and their assessment.In the case of the labour market, the institutional approach is used to a lesser extent, which in the author's view does not allow us to look at the problem comprehensively but provides an assessment only of individual narrow problems. For example, in our case, it is not how wages correlate with productivity and therefore should be paid less, but why productivity is low and how to create conditions for its long-term growth.Findings. Institutional problems begin with the training of workers1. The first stage is the Unified State Examination (USE), which often results in the choice of a university not based on the attractiveness of the future profession, but on the prestige of the university. Therefore, according to the survey by the service 'Rabota.ru' and the portal Rambler, in 2020 only 36% of Russians will have worked in a profession obtained from a university.2. Weak training of specialists in many private higher education institutions.3. Poor link between universities and employers. The ideal Soviet system of relations between universities and employers is a thing of the past. New companies in a market economy often do not want to spend money on personnel training and prefer to look for ready-made specialists on the market.4. The reluctance of employers to absorb the cost of additional training.All this affects the return on human capital.Economic and social factors that reduce returns:Job uncertainty and uncertainty about the future.Uneven supply and demand in the labour market across regions, forcing people to work on a rotational basis away from their families.Lack of a cheap rental housing market, etc.Distortions or myths: 1. A lot of specialists with higher education, more workers should be trained. In the Soviet economy, it was common to see specialists with higher education (turner, locksmith, etc.) in blue-collar jobs, which largely explains the large number of inventions and patents.2. Labour productivity is lower than wages, and the conclusion is that wages should be lowered. However, it is possible to squeeze 10-15% out of a person, which does not change the situation globally. It may be worth thinking about renewing fixed capital, which in market conditions is also not very profitable for the owner.In a market economy, the institutional problems on the labour market can only be solved with the help of the state by fundamentally changing the "rules of the game" between the state, companies, and employees. First of all, it is a question of creating incentives for employers to take part in the educational process of employees, creating an educational system comfortable for both the employee and the employer.This problem has to be considered. Individual insignificant changes will not change the situation. Unless the government realises and begins to reform the entire system, from training to the quality of the workplace, the return on human capital will remain low
