The impact of wages in the European part of Russia on migration in the far north

Abstract

© National Research University Higher School of Economics. This article analyzes the population decline in the Russian North associated with the outmigration of the labor force. First, we review previous empirical studies and show that migration to the North was previously driven by labor demand in the mining and extractive industries. However, higher economic development in the European part of Russia might also have had an impact on the migration to the Far North. In particular, we hypothesize that rising wages in the European part of Russia negatively affected such migration. We use official panel statistics on 65 Russian regions (53 in the European part and 12 in the Far North) over the period 2010-2017 and test this conjecture econometrically by estimating a fixed-effects model with a spatial lag. The model accounts for regional economic development, labor market characteristics, macroeconomic shocks, labor force education and other relevant parameters. We show that out-migration from the Far North was positively associated with increasing wages in the European part of Russia. However, we also find that increasing wages in some regions of the North partly counteracted this process. We conclude with policy implications for the development of the Arctic zone, such as increasing state support to boost the demand for labor in the Northern regions.