The Effect of Migration on Economic and Productivity Growth in Russia

Abstract

This research endeavors to delve into the impact of migration flows on the nation’s economic and productivity growth based on panel data from 80 Russian states for the period of 2015–2021. Our research aims to induce migration policies for the sustainable income and productivity growth of Russia. From the baseline regression analysis with state fixed effects and additional analysis with state random effects and the two-step system GMM, we found a positive impact of migration growth rate on per capita and TFP and the heterogeneity of its effects depending on the Russian regions. It indicates that migration outflows negatively influence the regional economies of Russia and suppress regional economic growth and the positive effects of migration inflows are the strongest shown in less populated states in the Siberian and Far Eastern Federal Districts. This is evidence of the negative effects of migration outflows, which are summarized by the exodus of labor and the loss of tax revenues. The Russian government should implement migration policies both in international and domestic contexts to attract migrants, considering that Russia suffers from outflows of skilled workers to other countries and unbalanced domestic migration flows to west Russia. To reduce migration outflows of workers to other countries, quality jobs should be created (through an increase in R&D), and other incentives and subsidies can be provided to encourage emigrants to return to Russia. For the migration inflows of small regions in Russia, domestic and foreign investment should be promoted to create jobs and establish infrastructure, which can also help slow down immigration from these regions.