Impact of Wages on Employment and Migration in the High North of Russia

Abstract

The research presented here examines the impact of wages on employment and migration in the High North regions of Russia. The unique features of the labour markets of these territories include compensative differentials and specific labour protection legislation. It makes the labour supply in the High North of Russia more flexible and labour demand more constrained compared with the rest of the country. Using the regional panel data provided by the Federal State Statistics Service (Rosstat) for the High North regions of Russia from 2005 to 2013, fixed effects models for dependent variables such as the number of employees, number of unemployed and net migration was used to analyse the impact of wages on migration. The obtained estimates demonstrate that wage significantly and positively affects interregional migration to the northern regions. Growth of wages attracts immigrants from other regions of the country and eventually leads to lower wages and higher unemployment in the northern territories. The main findings of this research can be used in the implementation of social policy in the High North regions of Russia.