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Working paper

Breaking out of Poverty Traps: Internal Migration and Interregional convergence

Guriev S., Vakulenko E.
In this paper, we study panel data on region-to-region gross migration flows in Russia for 1995-2010. We find that barriers to labor mobility that hindered internal migration in 1990s, have been generally eliminated by the end of 2000s. In 1990s many poor Russian regions were in a poverty trap: potential workers wanted to leave those regions but could not afford to finance the move. In 2000s (especially in late 2000s), these barriers were no longer binding. Overall economic growth and development of financial markets allowed even poorest Russian regions to grow out of the poverty traps. This resulted in convergence in Russian labor market in 2000s; the interregional gaps in incomes, wages and unemployment rates decreased substantially and are now comparable to those in Europe.