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FORECAST OF LABOR MIGRATION, REPRODUCTION OF POPULATION, AND ECONOMIC DEVELOPMENT OF RUSSIA

A. Vasileva

Abstract

Migration today is a worldwide phenomenon that plays an increasingly central role in economic development. The signing of free trade agreements in the early nineties, such as the Schengen Agreement (1985) or NAFTA (1995), increased mobility and encouraged movements between signatory member countriesВ’ populations. At the same time, improvements in transportation and communication infrastructures have also tended to increase net migration, making it not only the most important demographic aspect, but also a key to understanding the world economy. Russia is the second after the US most popular destination with over 11 million migrants. Its economy depends on the foreign labor because of the decrease of its working-age population and insufficient development of labor-saving technologies. For that very reason, the public administration should improve the effectiveness of regulating the international labor migration in the Russian regions by taking into account the characteristics of their demographic and economic development. To expand the body of evidence for policy-makers, we develop a model that allows forecasting interdependent development of migration, reproduction of the population, and the economy of Russian regions on the basis of special mathematical methods. Our model can predict, firstly, migrant patterns from many source countries to many host regions that are caused by the influence of such factors as the earning gap and the distance between the regions, the number of potential migrants in source countries and the number of migrants already in host regions. Secondly, the number of economically active local population in host regions taking into account dynamics of reproduction and age structure of the population. Thirdly, economic growth and labor market effects of change of the number of migrants and economically active local population in host regions. To automate the implementation of the model, the author developed a Java/Javascript-based computer program that ensures a high speed of data exchange with statistical databases, calibration, and forecasting and provides a wide range of services for presenting the results. The model was applied to data from Russian regions and the Commonwealth of Independent States (CIS) countries. The model predicts that, even with the maximum use of potential labor migration from the CIS countries, the total labor force in Russia will decline by almost 5% in 2030 compared to 2016 and will stand at 74,684 thousand people. At the same time, the absolute shortage of labor will be accompanied by the increase in unemployment rate from 5.8% to 7.1% over the same period. The forecast situation indicates the growing structural imbalance of supply and demand in the labor market as a result of mismatch between the qualifications of job seekers and open vacancies. In addition to labor problems, Russia's GDP growth in the forecast period will be hindered by extremely low labor productivity resulting from labor-intensive type of economy with a high share of manual labor and inefficient use of technology and equipment that dates back to Soviet times. These findings have important policy implications.

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