Academic journal article Journal of Urban and Regional Analysis

Does Location Affect Employment? Evidence from the High North of Russia

Academic journal article Journal of Urban and Regional Analysis

Does Location Affect Employment? Evidence from the High North of Russia

Article excerpt

(ProQuest: ... denotes formulae omitted.)

Introduction

The impact of location on labour market outcomes is a relatively modern research problem of current interest. Evidence from Europe and the USA showed that the location of labour markets within one country should be taken into account in carrying out research into local labour market outcomes and when designing economic policy (David et al. 2010, Moretti 2011, Manning and Petrongolo 2011, Combes et al. 2012, Bratti and Leombruni 2014, Mocanu and Serban 2015). In general, the development of economic activity is highly dependent on geographical position (Fujita et al. 1999). This is especially true for the large countries, which occupy large territories. The geography of the Russian Federation is such that climate, natural resources and other territorial characteristics vary significantly among the regions and determine the structure and development of the regional economy (Moe and Kryukov 2010, Zubarevich and Safronov 2011, Tatarkin and Loginov 2015). The regional economy is the basis for regional market outcomes, so we can assume that the location of the labour market affects employment, unemployment and wage distribution in the particular region. The aim of this paper is to investigate what peculiarities the location of the High North regions of Russia creates in employment in these areas.

There are no empirical studies on employment in the High North of Russia so far, but a number of works highlight the specific features of the labour markets of the northern territories of Russia or suggest their existence. We can distinguish the following main areas: theoretical models and empirical studies that describe the equilibrium level of the regional labour markets and the reasons for migration of employees between regions (Rosen 1979, Roback 1982, Blanchard and Katz 1992, Moretti 2011). Also, there are studies that identify certain areas of the country as the objects of analysis concerning certain characteristics (e.g., one -company towns): Berger et al. 2003, Bignebat 2006, World Bank 2010, Ammermueller et al. 2007, Caponi 2008, Commander et al. 2011, Giltman 2014, Semerikova and Demidova 2015. The body of literature that contains the results of the research into the inter-regional differences in wages, including the compensative differentials, comprises the works of: Coelho and Ghali 1971, Greenwood et al. 1991, Bignebat 2003, Lukiyanova and Oshchepkov 2007, Oshchepkov 2010, Lukiyanova 2011, Oshchepkov 2015. A number of studies were devoted to the estimation of the impact of labour market institutions on labour market outcomes in Russian regions: Gimpelson et al. 2009, Mironenko 2012, Lehmann and Zaiceva 2013, Gimpelson and Kapeliushnikov 2014, Muravyev and Oshchepkov 2016.

The High North of Russia is traditionally associated with an unfavourable climate, remoteness from the European part of the country and high wages, which should compensate for the uncomfortable living conditions. The High North regions of Russia occupy a huge area of the country (Fig. 1) and they can be characterized by a 7% share of the population of Russia and about 16% of the Gross Domestic Product (Tatarkin and Loginov 2015). Most areas of the High

North have a strictly oriented economic specialization. Situated here are about 80% of the explored natural resources of Russia, of more than 60 types (Tatarkin and Loginov 2015). In value terms, the High North regions of Russia produce more than 50% of the product of the extractive industry of Russia. The High North regions of Russia are statutory defined. There are regions that are totally and regions that are partly recognized as the High North. This definition is necessary for the application of the system of benefits for employees in these areas. The mentioned system has remained in force since 1960.

One of the most important issues for the state regulation of employment conditions in the High North are the additional tools which were designed in order to increase wages in the North compared with the other regions of the country. …

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