Tag: Internal migration
Labor Market Adaptation of Internally Displaced People: The Ukrainian Experience
This brief is based on research that investigates the probability of employment among displaced and non-displaced households in a region bordering territory with an ongoing military conflict in Eastern Ukraine. According to the results, internally displaced persons (IDP) are more educated, younger and more active in their job search than locals. Nevertheless, displaced individuals, particularly males, have experienced heavy discrimination. After controlling for personal characteristics, the structure of the household, location, non-labour incomes and endogeneity of displacement, IDP males are 17% less likely to be formally employed two years after resettlement than locals.
Internally displaced persons in Ukraine
In 2014, 23 years after independence, Ukraine suddenly found itself among the top-ten of countries with the largest internally displaced population. During the period 2014–2016, 1.8 million persons registered as internally displaced. Potentially, about 1 million more reallocated to Russia and about 100,000 to other countries nearby, where they sought refugee or labour migrant status (Smal, 2016).
The Ministry of Social Policy of Ukraine (MSPU) has regularly published very general reports on displaced persons. According to these reports, at the end of February 2016, the internally displaced persons in Ukraine included 22,000 individuals from Crimea and over 1.7 million citizens from Eastern Ukraine. These are mostly individuals who registered as IDPs to qualify for financial assistance from the state and some non-monetary benefits. Among them, 60% are retired people, 23.1% are individuals of working age, 12.8% are children and 4.1% are people with disabilities (Smal and Poznyak, 2017). In fact, the MSPU registers not only displaced persons but also those who de facto live in the occupied territories and occasionally travel to territories controlled by the Ukrainian authorities to receive their pension or social benefits (so called ‘pension tourism’). On the other hand, some IDPs did not register either to avoid bureaucracy or because they were unable to prove their status due to lack of documents. Recent publications that are based on surveys portray a more balanced distribution: 15% are retired people, 58% are individuals of working age, 27% are children and 13% are people with disabilities (IOM and the Ukrainian Centre for Social Reforms, 2018).
Only limited information is available about IDPs’ labour market activity. According to the State Employment Service (SES), between March 2014 and January 2016, only 64,300 IDPs or 3.75% referred to the SES for assistance (Smal and Poznyak, 2017). On the one hand, this figure reflects the relatively low reliance of displaced Ukrainians on the SES services in their job search. On the other hand, the geographical variation in the share of SES applicants suggests that Ukraine’s IDPs who moved further from the war zone and their homes were more active in trying to find a job.
Data
Our primary data were collected in June–August 2016 by REACH and provided by the Ukraine Food Security Cluster (UFSC) as a part of the needs assessment in Luhansk and Donetsk oblasts of Ukraine – two regions that were directly affected by the conflict. These two regions have hosted roughly 53% of all IDPs in Ukraine (Smal and Poznyak, 2017). We argue that households that did not move far from the place of conflict are most likely to be driven by conflict only, while long-distance movers may combine economic and forced displacement motives.
The data set offers information on 2500 households interviewed in 233 locations and is statistically representative of the average household in each oblast. It includes respondents currently living in their pre-conflict settlements (non-displaced, NDs) and respondents who report a different place of residence before the conflict (IDPs). The IDP group comprises individuals with registered and unregistered status and from both sides of the current contact line. The non-IDP group includes only households living on the territory controlled by the Ukrainian Government that did not move after the conflict had started.
Our sample covers 1,135 displaced households that came from 131 settlements. Most of the reallocations took place in early summer 2014 with the military escalation of the conflict in Eastern Ukraine. Thus, the average duration of displacement up to the moment of the interview was 637 days (or 21 months). This is a sufficiently long period for adaptation and job search. However, there is enough variation in this indicator – some families left as early as March–April 2014, while others were displaced in June 2016, just a few days before the interviews started.
Results
Simple comparison shows that heads of displaced households are on average almost four years younger than those of non-displaced households (Table 1). In terms of education, displaced households are found to be more educated than non-displaced households, as there are significantly more IDP household heads with tertiary education and significantly fewer individuals with only primary, secondary or vocational degrees. In particular, 37% of IDP household heads hold a university degree compared with 22% of household heads among the local population. This seems to suggest positive displacement selection. IDPs are slightly more likely to be headed by females and unmarried persons, although these differences are statistically insignificant. Displaced households include more children aged under five (0.35 vs. 0.22 children per non-displaced household) and 6 to 17 years (0.42 vs. 0.34, respectively) and fewer members aged over 60 years (0.58 vs 0.66, respectively). There is no difference in the number of working-age adults or disabled individuals per household among IDPs and non-IDPs. The average household size is statistically similar for the groups (2.74 vs. 2.65 persons per IDP and non-IDP household, respectively).
Table 1. Selected descriptive statistics
| Internally displaced households | Non- displaced households | |
| Household head employed | 0.43*** | 0.48*** |
| Household head characteristics | ||
| Age (years) | 48.10*** | 52.85*** |
| Male | 0.49 | 0.52 |
| Education | ||
| vocational | 0.42*** | 0.49*** |
| university | 0.37*** | 0.22*** |
| Household characteristics | ||
| Size (persons) | 2.74 | 2.65 |
| Number of children 0-5 | 0.35*** | 0.21*** |
| Number of children 6-17 | 0.42*** | 0.34*** |
| Number of members 60+ | 0.58** | 0.66** |
| IDP payments | 0.50*** | 0*** |
| Humanitarian assistance | 0.78*** | 0.28*** |
There are further differences in the types of economic activity and occupations among IDPs and non-IDPs. Prior to the conflict, displaced respondents were more likely (than non-displaced persons) to be employed as managers or professionals and less likely to hold positions as factory or skilled agricultural workers. This result also speaks in favor of a positive displacement selection story.
As expected, the conflict has had a negative effect on human capital in the government controlled areas of Donetsk and Luhansk regions. We observe some deskilling at the time of the interviews, which is especially pronounced for IDPs. In particular, the share of managers among the IDPs had reduced from 12% to 5% and that of technicians from 15% to 12%, while the proportion of service and sales employees had increased from 10% to 13%, that of factory workers from 11% to 15% and that of skilled agricultural workers from 2% to 6%.
Considering the economic activity in the current location, we can note that on average the heads of displaced households are 5% less likely to be employed than those of non-displaced households (43% vs. 48%, respectively). In both groups, a large share of respondents report difficulties in their job search, but IDPs are 13% more likely to experience this problem. They report changing their pre-conflict occupation three times more often than non-IDPs (37% vs. 11%).
Government and non-government assistance may also drive the differences in employment. Economic theory states that individuals are less likely to work if they have some backup in the form of non-labour earnings. Financial support and humanitarian assistance are widely used to smooth a displacement shock. At the same time, improperly designed assistance schemes may reduce the stimulus to search for a job.
IDPs are 9% less likely to include earnings in their household’s top three main sources of income than the non-displaced population (46% vs. 55%, respectively), meaning that they rely more on various social payments and pensions. In addition, displaced households may be slightly more reluctant to search for a job due to displacement assistance from the government (received by 50% of IDPs compared with 0% for non-IDP households), although the amounts are quite modest. According to the existing legislation, IDPs can receive regular monthly state payments and one-time state payments. Regular monthly payments can be received by any IDP and cannot exceed UAH 3,000 (~$111) for an ordinary household, UAH 3,400 for a household with disabled people and UAH 5,000 (~$185) for a household with more than 2 children. Eligibility and the size of the one-time payment are determined by the local government. In the data set, 95% of IDPs receive less than UAH 3,000 while the 2016 average monthly wage was UAH 6,000 in Donetsk and UAH 4,600 in Luhansk regions.
In addition, IDPs are three times more likely to receive humanitarian assistance (78% vs. 28% among displaced and non-displaced persons, respectively). This support includes mostly food and winterisation items but also cash (26% among displaced vs. 12% among non-displaced assistance receivers). On the other hand, to cover reallocation and adaptation costs, some IDPs use their financial reserves, and as a result they are by 10 p.p. more likely to report no or already depleted savings. This may increase their stimulus to engage in a more active job search.
After taking into account the observed and unobserved differences between the groups as well as controlling for the location fixed effect, we find that the difference in the probability of employment between displaced and non-displaced persons increases from a casually observed slit of 5% to a chasm of 17.3%. This result suggests that IDPs are [negatively] discriminated despite being younger, more educated, skilled and more ‘able’ in the labour market. Specifically, 7 out of 17 p.p. (41% of the gap) are due to the variation in observed household head characteristics and family composition, while unobserved displacement-related features (such as attitude towards change, activism, mental and physical ability to reallocate) account for 5 p.p. (29%) of the gap. Controlling for particularities of a current location does not substantially affect the estimated differences.
Figure 1. Main results
We re-estimate these regressions using an employment indicator that includes both formal and informal employment (as defined by the respondents), accounting for occasional and irregular employment, including subsistence agricultural work. Since informal work is more common among IDPs, this definition of employment leads to a reduction in the average casually observed gap from 5% to 3%. However, after controlling for all the factors, we obtain the same result – a 17.8% difference between displaced and non-displaced households.
Conclusion
Policy makers and international donors should not be misled by the seemingly comparable probability of employment among IDPs and non-IDPs based on simple statistics. The average 0–5% difference in unconditional employment rates conceals the actual 17% gap in the likelihood of having a job. The contribution of unobserved displacement-related factors in hiding the true gap is large, especially for males seeking formal employment. Without adjusting for it, we would underestimate the real difference in employment probability by one-third to one-half.
Our study produces firm evidence that displaced individuals in Ukraine, particularly males, have been discriminated against in terms of employment. Our results further suggest that male heads of displaced households experience more discrimination in the formal labour market, while the situation is the opposite for females, who are more likely to face unequal treatment in the informal sector. Policy makers and volunteers should take this difference into account in the adaptation of male- and female-headed households.
Humanitarian assistance to displaced individuals was found to have no negative effect on their employment, which suggests that it is provided in an effective manner. Thus, this tool can be used to mitigate the discrimination.
References
- IOM and the Ukrainian Centre for Social Reforms. (2018). ’National Monitoring System Report on the Situation of Internally Displaced Persons.’
- Smal, V. and O. Poznyak. (2017) ‘Internally displaced persons: social and economic integration in hosting communities’, PLEDDG Project.
- Smal, V. 2016. ’Внутрішньо Переміщені Особи: Соціальна та економічна інтеграція в приймаючих громадах.’
- Vakhitova, H. and P. Iavorskyi, “Employment of Displaced and Non-displaced Households in Luhansk and Donetsk Oblasts”, Europe-Asia studies, (forthcoming).
Disclaimer: Opinions expressed in policy briefs and other publications are those of the authors; they do not necessarily reflect those of the FREE Network and its research institutes.
Inter-Regional Convergence in Russia
There was no inter-regional convergence in Russia during the 1990s but the situation changed dramatically after 2000. While interregional GDP per capita gaps still persist, the differentials in incomes and wages decreased substantially. Interregional fiscal redistribution has never played a major role in Russia, so understanding interregional convergence requires an analysis of internal capital and labor mobility. The capital market in Russia’s regions is integrated in a sense that local investment does not depend on local savings. Also, the barriers to labor mobility have come down. The situation is very different from the 1990s when many poor Russian regions were in a poverty trap: potential workers wanted to leave those regions but could not afford to finance their move. After 2000 (especially later in the first decade), these barriers were no longer binding. Overall economic development, as well as the development of financial and real estate markets, allowed even the poorest Russian regions to grow out of the poverty trap. This resulted in some convergence in the Russian labor market; the interregional gaps in incomes, wages and unemployment rates are now comparable to those in Europe.
Russia’s Regions are Finally Converging
Large interregional differences have always been an important feature of Russia’s transition to a market economy. This has been explained by the pre-transition geographical allocation of population and of physical capital that was determined by non-market forces. Soviet industrialization policies often pursued political or geopolitical goals. Even when they reflected economic realities, the economic decision-making was distorted substantially by central planning, price-setting and subsidies. In addition, the allocation of production was intended to serve a different country – the Soviet Union (or even the whole Council for Mutual Economic Assistance countries) rather than Russia alone. Moreover, believing in economies of scale rather than in competition, Soviet planners created many monotowns.[1] These towns, cities or even regions relied on a single industry. Therefore economic restructuring and inter-sectoral reallocation implied not only moving workers or capital between employers in one town, but also required moving workers or capital between cities.
Despite the need for geographical reallocation during the transition to a market economy, the differentials between Russian regions remained high (and even increased!) throughout the 1990s. However, after 2000 (especially later in the first decade) there was substantial convergence in incomes and wages (Figure 1). By 2010, this resulted in reduction of the inter-regional differences in incomes in line with European levels. In Figure 2, while inter-regional differences in Russia are still substantially above those in the US and Western Europe, they are comparable to those in the EU.
Figure 1. Differences among Russian Regions in Terms of Logarithms of Real Incomes, Real Wages, Unemployment, Real GDP Per Capita
Source: Guriev and Vakulenko (2012). Note: All variables measured as population-weighted standard deviations.
Figure 2. Income Differentials in Russia, Europe and the US
Interestingly, despite income convergence, there was no convergence in GDP per capita among Russia’s regions. Inter-regional dispersions in GDP per capita remain high not only by European standards, but also by standards of less developed countries. Indeed, in Figure 3, Russia is placed in the international context using the data recently developed by Che and Spilimbergo (2012).
Che and Spilimbergo calculate interregional differences for 32 countries in a compatible way and plot them against GDP per capita (averaged out for 1995-2005, in real PPP-adjusted dollars). Their main finding is that that there is a negative correlation between interregional differences and GDP per capita.
Since Russia was not in Che and Spilimbergo’s dataset, Guriev and Vakulenko (2012) reproduced their calculations for Russia, both for the 1995-2005 average (as they do for the other countries) but also for the individual years 1995, 2000, 2005 and 2010. It turns out that while Russia was “abnormally uniform” in the early 1990s, it did experience substantial divergence in the late 1990s. There was continuing, albeit weaker, divergence even in the early 2000s – so Russia became “abnormally unequal” given its GDP level. Even though there was some convergence late in the first decade, Russia is still “abnormally unequal”. Given the fast economic growth since 2000, Russia should have become substantially “more uniform” – at least given the downward-sloping relationship between income and inter-regional inequality in Che-Spilimbergo’s data.
Source: Che and Spilimbergo (2012). Note: The trend line is calculated without Russia.
Why didn’t income convergence happen in the 1990s and only start after 2000? Why hasn’t GDP convergence taken place? Large interregional differences are consistent with reduced income, wage, and unemployment differentials if the factors of production (labor and capital) have become more mobile while the productivity differences (due to geography, political and economic institutions, and inherited differences in infrastructure) remain in place. Therefore, in order to understand income convergence, an understanding of labor and capital mobility is needed.
Interregional Labor Mobility in Russia
Andrienko and Guriev (2004) studied internal migration flows in Russia in the 1990s and showed that the lack of convergence was explained by a “poverty trap”. In general, Russians did move from poorer to richer regions. However, in Russia’s very poor regions (in about 30% of the regions hosting about 30% of Russia’s population) the potential outgoing migrants wanted, but could not afford, to leave; so for these regions, an increase in income would have resulted in higher rather than lower outmigration.
What changed since 2000? Why did barriers to mobility come down? There are multiple potential explanations: (i) economic growth simply allowed most of Russia’s regions to grow out of the poverty trap; (ii) the development of financial and real estate markets reduced the transactions costs of moving therefore reducing the importance of the poverty trap; (iii) the development of capital markets increased capital mobility; (iv) federal redistribution reduced interregional differences.
According to Guriev and Vakulenko (2012), federal redistribution played a very minor role, while the other three explanations are consistent with the data. Our analysis of capital flows is, however, limited by the lack of detailed data, but our study of panel data on net capital inflows and investment shows that, first, capital does flow to regions with higher returns to capital and with lower wages and incomes, thus contributing to convergence. Second, investment in Russia’s regions is not correlated with savings which suggests that Russia’s capital market is not regionally segmented. As our data on capital are limited to the period after 2000, we cannot compare the recent years to those during the 1990s, but at least we can argue that recently, the capital market was functioning well and was contributing to convergence.
It is striking to what extent the poverty trap and liquidity constraints used to be, but are no longer, binding for labor mobility. Figure 4 is a graphical illustration of the poverty trap. Based on a semiparametric estimation with region-to-region fixed effects it shows the relationship between income in the origin region and migration (both in logarithm). Each dot on this graph represents migration from one region to another in a given year (during 1995-2010). As discussed above, the relationship is non-monotonic. If the sending region is poor, an increase in income results in higher out-migration; for richer regions, a further increase in income results in lower migration. The peak is at log income equal to 8.7 which amounts to average income equal to exp(8.7) ≈ 6003 in 2010 rubles and 1.02 of the Russian average subsistence levels in 2010. The regions to the left of the peak are in the poverty trap while the regions to the right are in a “normal mode” where liquidity constraints are not a substantial barrier to migration.
While in the 1990s tens of regions were below this threshold (and therefore were locked in the poverty trap), by 2010 only one region was below this threshold. In this sense, overall economic growth allowed Russian regions to overcome liquidity constraints by simply growing out of the poverty trap. We ran additional tests to show that financial development also contributed to relaxing liquidity constraints.
Figure 4. Income in the Origin Region and Migration[3]
What Next?
Should we be worried about high interregional differentials in GRP per capita? Not necessarily. In order to ensure inter-regional convergence in incomes and wages, convergence in GDP per capita is not required. As long as barriers to labor and capital mobility are removed, mobility (or even a threat of mobility) protects workers. Therefore, the very fact of remaining large inter-regional dispersion in GDP per capita should not serve by itself as a justification for government intervention (e.g. region-specific government investment).
As reducing barriers to mobility is important for convergence, this is exactly where policies can contribute the most. Developing financial and housing markets and improving investor protection are better policies for reducing inter-regional differences in income; these factors have already reduced income differentials among Russian regions.
We should, however, provide an important caveat. Our analysis was done at the regional level. We therefore do not address the sub-regional level and have nothing to say on the need for town-level government interventions. There may well be many cases where individual towns (e.g. so called mono-towns) are locked in poverty traps. In those cases government intervention may be justified and desirable. Our results show that poverty traps did exist in Russia in the 1990s at the regional level. These may well still exist at the town level even now. We cannot extrapolate the quantitative value of the income threshold we identified for the poverty traps from regional level to the town level but our analysis provides very clear qualitative criteria for government intervention. If the average citizen of a town would benefit from moving out but cannot finance the move (e.g. because his/her real estate is worthless), then the government can and should step in through supporting financial intermediaries that could finance the move. Therefore our analysis is fully consistent with the rationale for the government’s mono-towns restructuring program.
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References
- Andrienko, Yuri, and Sergei Guriev (2004). “Determinants of Interregional Mobility in Russia: Evidence from Panel Data.” Economics of Transition, 12 (1), 1-27.
- Che, Natasha, and Antonio Spilimbergo (2012). “Structural reforms and regional convergence.” CEPR Discussion Paper No. 8951.
- Guriev, Sergei and Elena Vakulenko (2012). “Convergence among Russian regions.” Background paper for the World Bank’s Eurasia Growth Project.
[1] Russian law defines monotowns as town where at least 25% employment is in a single firm. Even now, the Russian government’s Program for the Support of Monotowns lists 335 monotowns (out of the total of 1099 Russia’s towns and cities) with the total of 25% of Russia’s urban population. [2] EU (19): Belgium, Czech Republic, Germany, Estonia, Ireland, Greece, Spain, France, Italy, Latvia, Lithuania, Netherlands, Austria, Poland, Portugal, Slovakia, Finland, Sweden, United Kingdom. For EU (19) we consider only those NUTS-2 units for which there is data for each year. Western Europe: Austria, Belgium, Germany, Ireland, Greece, France, Italy, Netherlands, Norway, Portugal, Finland, Sweden, United Kingdom. [3] The graph shows the relationship between the logarithm of the real income in the sending region and the logarithm in migration controlling for income in the receiving region, unemployment and public goods in both sending and receiving, year dummies and other factors influencing migration. Moscow and Saint Petersburg are excluded.
Property Rights and Internal Migration
Authors: Paul Castañeda Dower and Andrei Markevich, CEFIR.
Russia currently faces an important policy challenge related to relatively high levels of regional inequality. Regional imbalances that persist, especially in unemployment, reflect inefficiency and may lead to political instability. National capital and labor markets should work to correct these imbalances. This policy brief focuses on the labor market. In particular, why internal migration is relatively low in Russia, and suggests a new direction of policies to increase the mobility of the Russian workforce.
Interregional differences in income and unemployment remain high in Russia relative to the US and Europe (Andrienko and Guriev 2004). Figure 1 shows the change in unemployment for Russia’s regions between 1992 and 2007 plotted against the level of unemployment in 1992. We calculate the change in unemployment using 2007 since the global financial crises led to a different type of convergence, a widespread increase in unemployment. The absence of a downward slopping trend demonstrates that convergence across regions is not taking place.
Internal migration could solve regional imbalances in unemployment by matching unemployed individuals from areas with high unemployment to job vacancies in areas with more employment opportunities. In the US, for example, Blanchard and Katz (1990) show that regional economies adjust to region-specific shocks mainly through internal migration. However, disparities persist in Russia, in part, because of the lack of internal migration, which is relatively low compared to the US and Europe (Andrienko and Guriev 2004). It is not surprising then that a recent report by the World Bank (World Bank 2010) claims that Russians should be moving more within the country than they currently are, considering the economic costs and benefits of migration. The remainder of this policy brief discusses the connection between property rights and internal mobility in order to understand why the Russian labor market allows such high levels of regional disparities.
To address this issue, we look to the past since there is evidence from the late Tsarist period linking property rights to internal migration that has modern day policy implications. For most of Russia’s history, labor mobility has been restricted and controlled. Serfdom limited peasants’ mobility for centuries; restrictions survived after emancipation under the Russian repartition commune regime. The Soviet propiska system introduced in 1932 heavily regulated internal migration till the very end of the USSR and there are remnants of this propiska system even today. However, the extensive state control over internal mobility was not always the case. In the late Russian Empire, internal mobility was relatively unrestricted by the state and internal migration worked to correct regional imbalances (Markevich and Mikhaillova 2012). This historical period offers a good opportunity to investigate the economic causes of labor mobility in Russia without the veil of legal and political restrictions.
Figure 2 shows a startling pattern in the migration flows from the European provinces to the Asian part of the empire during this period. The sparsely populated regions of Siberia and Northern Kazakhstan that had abundant virgin land were attractive destinations for Russian peasants. We propose that an important factor in understanding the explanandum is the Stolypin agrarian reform, the timing of which is exhibited by the vertical dotted line in Figure 2. The annual number of migrating households was about 15,000 before the reform but dramatically increased to a level of 40,000 households per year after the reform. We argue that the reform increased migration flows largely because it improved the liquidity of peasants’ assets, providing greatly needed funds to finance migration.
The Stolypin titling reform can be thought of as a quasi-natural experiment through which one can judge the importance of financial constraints. For our purposes, the reform’s impact on liquidity is limited to forty-one European provinces (guberniya) where at least five percent of the rural population resided in repartition (peredel’naya) communes. The remaining nine European provinces, where few, if any, peasants were members of repartition communes, constitute the control group. The reform gave households the right to exit from repartition communes and convert their communal allotment to individual ownership of land recognized by a land title. The conversion to individual ownership improved the liquidity of land and made migration more attractive since migration no longer entailed losing one’s allotment and households could more easily sell their land allotments to finance migration.
Using a panel dataset of regional migration to the Asian part of the empire, we apply a difference-in-differences analysis using the distinction between treatment and control groups mentioned above. Our results indicate that 160,000 of the 441,000 households that migrated after the reform can be attributed to the reform. In other words, the relaxing of land liquidity constraints explains at least 18.1% of all post-reform Europe-Asia migration in the late Russian Empire. To understand how large of an impact the reform had, we make a back of the envelope calculation that yields an estimate of 0.12 percentage points of GDP growth per year or about 5% share of total economic growth during this period (Chernina et al 2012).
This historical evidence of the relative importance of liquidity of land for internal migration translates well into the contemporary policy discourse. After consulting both qualitative and quantitative studies on internal migration in Russia, Andrienko and Guriev (2005) conclude that “the most important barrier to migration is the underdevelopment of financial and real estate markets.” Figure 3 shows the relationship between growth of unemployment in a region and the share of privatization of residences using an added variable plot. Here, we condition the relationship on GDP per capita in 2000 and include federal district fixed effects in order to more closely isolate the liquidity effect of privatization. We use as base year 2000 instead of 1992 as in figure 1 because not all regions had initiated privatization until as late as the mid to late 90’s. While this correlation is not strong and is merely suggestive of an underlying relationship between private ownership and mobility, the graph illustrates that those regions with greater levels of privatization in 2000 subsequently experienced greater declines in unemployment during 2000-2007.
In summary, the ability of property rights to affect the financing of migration as well as the role that property rights play in the opportunity cost of migration calls for policymakers to include the issue of property rights when considering barriers to internal mobility. These findings fit well within the new economics of migration literature that criticizes and widens the previous narrow focus on wage differentials. In transition countries, these findings also point towards the importance of how privatization occurred. Different ways of organizing private ownership lead to different transaction costs incurred in buying and selling residential property. For example, in some former Soviet Republics, the privatization of individually owned apartments often did not fully specify property rights concerning the ownership of the apartment building and the internal structures that support the individual apartments. These ambiguities increase transaction costs and reduce the liquidity of the asset. Policies concerning internal mobility should therefore pay closer attention to the liquidity of Russians’ assets and how to improve it.
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References
- Andrienko, Y., Guriev, S. (2004). “Determinants of Interregional Labor Mobility in Russia.” Economics of Transition 12(1).
- Andrienko, Y., Guriev, S. (2005). “Understanding Migration in Russia.” CEFIR Policy Paper Series 23.
- Blanchard, O. and Katz, L. (1992) “Regional Evolutions”, Brooking Papers on Economic Activity, 1.
- Chernina E., Castañeda Dower P., and Markevich, A. (2012) “Property Rights, Land Liquidity and Internal Migration” NES Working Paper.
- Markevich, A. and Mikhailova, T. (2012). “Economic Geography of Russia” in The Handbook of Russian Economy. Oxford University Press, eds. Alexeev, M. and Weber, S.