Worker Displacement in Russia and Ukraine: A Comparative Analysis using Micro Data

Abstract

Using unique data from a supplement to the Russian Longitudinal Monitoring Survey (RLMS) on displaced workers in Russia and from the Ukrainian Longitudinal Monitoring Survey (ULMS) we analyse, and provide the first solid evidence on, displacement in Russia and Ukraine in a period of growth. Our estimates establish that quits dominate separations but that displacement rates are clearly not negligible. They amount to between 2.5 and 3 per cent of employment in Russia and between 2 and 5 per cent in Ukraine. We also show that displacements are not random. Results that are valid across both countries demonstrate that unskilled and less educated workers are more affected as are workers in the agricultural sector. In countries like Russia and Ukraine, where unemployment benefits are either ungenerous or non-existent for the average worker, long spells of unemployment can impose large monetary costs on workers. We point to these costs when presenting cumulative return rates for job movers, by highlighting the fact that there is a very sizeable privileged group of displaced workers who find a new job within a very short time whilst the majority has difficulty in finding new employment. This latter group is associated with low educational attainment and low skills. It is this group (larger in Ukraine than in Russia) which is not so rapidly absorbed by the labour market, that should be the target of social policy intervention by the Russian and Ukrainian governments.