Russian immigration liberalization in 2007-2008: lower wages and other consequences
We explore the 2007-2008 noticeable liberalization of Russian labor immigration, perceived as a natural experiment. How it influenced the labor market equilibrium and especially wages of certain categories of Russian employees? We use various data, including remittances from Russia, and restore related hike in official and unofficial labor immigration. According to our rough estimate, the mass of gastarbeiters increased significantly, from 3.4 mln in 2006 to 4.3 mln (2006) and then to 4.9 mln (2008). This did not cause additional unemployment, but influenced wages. We follow the Borjas (2016) method of assessing the impact of natural experiments, and we are interested in (equilibrium) wage elasticities and interdependencies among the labor groups in Russia. To reveal the elasticity of equilibrium wages, responding to 2007-2008 inflow of (mostly unskilled) labor, we run difference-in-difference regressions on RLMS data. For some Russian residents, their wages responded to new policy noticeably. Namely, the most affected were the pre-established Asian migrants: they lost about 14-17.5% wages in response to 8%-14% increase in similar working force. The ethnic Russians with blue-collar or low qualification lost about 4.5-5.5% of wages, while the impact on white-collars was insignificant. Arguing about the macro-economic consequences of such liberalization policies for Russia, we thereby point out the negatively affected categories of employees and the degree of their losses, which can be compared with additional GDP generated.