Firm employment dynamics in Kazakhstan after sudden Russian immigration

Kazakhstan was the top destination country for Russian immigrants in 2022, a year when Russian emigration sharply increased due to new international sanctions and war mobilization. The circumstances offer a rare opportunity to explore how a large sudden skill-abundant immigration within an economic union affects firm employment dynamics for a middle-income receiving country. Kazakhstan and Russia share the world's longest continuous land border, so immigration effects are regionally dispersed rather than concentrated solely in cities, and Kazakhstan offers business registers data to explore firm-level employment dynamics. Absent fine regional data on immigration flows, our empirical approach uses a pre-war share of the Russian population in 215 districts of Kazakhstan as a reduced-form instrument for the treatment of Russian immigration. We find no pre-war trends in firm employment growth related to the Russian district population shares. Using difference-in-differences estimation, we find large effects of 2022 Russian immigration on the employment growth for Kazakhstan's incumbent firms in more affected regions. The employment growth is larger for small firms, young foreign-owned firms, older domestic firms, and ICT firms, and results are robust to the exclusion or inclusion of Kazakhstan's two major cities of Almaty and Astana. We estimate that Kazakhstan's regions, excluding the two major cities, would have experienced a private sector employment fall of 86,500 in 2022 rather than the actual increase of 21,500 if Russian immigration flows had not occurred.