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Convergence between Russian regions


  • Sergei Guriev

    () (New Economic School)

  • Elena Vakulenko

    () (National Research University Higher School of Economics)


In this paper we study convergence among Russian regions. We find that while there was no convergence in 1990s, the situation changed dramatically in 2000s. While interregional GDP per capita gaps still persist, the differentials in incomes and wages decreased substantially. We show that fiscal redistribution did not play a major role in convergence. We therefore try to understand the phenomenon of recent convergence using panel data on the interregional reallocation of capital and labor. We find that capital market in Russian regions is integrated in a sense that local investment does not depend on local savings. We also show that economic growth and financial development has substantially decreased the barriers to labor mobility. We find that in 1990s many poor Russian regions were in a poverty trap: potential workers wanted to leave those regions but could not afford to finance the move. In 2000s (especially in late 2000s), these barriers were no longer binding. Overall economic development allowed even poorest Russian regions to grow out of the poverty traps. This resulted in convergence in Russian labor market; the interregional gaps in incomes, wages and unemployment rates are now below those in Europe. The results imply that economic growth and development of financial and real estate markets eventually result in interregional convergence.

Suggested Citation

  • Sergei Guriev & Elena Vakulenko, 2012. "Convergence between Russian regions," Working Papers w0180, Center for Economic and Financial Research (CEFIR).
  • Handle: RePEc:cfr:cefirw:w0180

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    References listed on IDEAS

    1. Gerasimova, Irina, 2009. "Sources of Income as a Factor of Interregional Social Economic Differentiation of the Russia’s Population (1995-2007)," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 16(4), pages 60-84.
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    3. Francois Libois & Vincenzo Verardi, 2013. "Semiparametric fixed-effects estimator," Stata Journal, StataCorp LP, vol. 13(2), pages 329-336, June.
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    7. Konstantin A. Kholodilin & Aleksey Oshchepkov & Boriss Siliverstovs, 2009. "The Russian Regional Convergence Process: Where Does It Go?," Discussion Papers of DIW Berlin 861, DIW Berlin, German Institute for Economic Research.
    8. Fedorov, Leonid, 2002. "Regional Inequality and Regional Polarization in Russia, 1990-99," World Development, Elsevier, vol. 30(3), pages 443-456, March.
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    Cited by:

    1. Michele Coscia & Timothy Cheston & Ricardo Hausmann, 2017. "Institutions vs. Social Interactions in Driving Economic Convergence: Evidence from Colombia," CID Working Papers 331, Center for International Development at Harvard University.
    2. Nicola Gennaioli & Rafael La Porta & Florencio Lopez De Silanes & Andrei Shleifer, 2014. "Growth in regions," Journal of Economic Growth, Springer, vol. 19(3), pages 259-309, September.
      • Nicola Gennaioli & Rafael LaPorta & Florencio Lopez-de-Silanes & Andrei Shleifer, "undated". "Growth in Regions," Working Paper 73436, Harvard University OpenScholar.
      • Nicola Gennaioli & Rafael La Porta & Florencio Lopez de Silanes & Andrei Shleifer, 2013. "Growth in Regions," NBER Working Papers 18937, National Bureau of Economic Research, Inc.
    3. Guriev, Sergei & Vakulenko, Elena, 2015. "Breaking out of poverty traps: Internal migration and interregional convergence in Russia," Journal of Comparative Economics, Elsevier, vol. 43(3), pages 633-649.
    4. Breinlich, Holger & Ottaviano, Gianmarco I.P. & Temple, Jonathan R.W., 2014. "Regional Growth and Regional Decline," Handbook of Economic Growth,in: Handbook of Economic Growth, edition 1, volume 2, chapter 4, pages 683-779 Elsevier.
    5. Vakulenko, E. & Gurvich, E., 2016. "Real Wage Flexibility in Russia: Comparative Analysis," Journal of the New Economic Association, New Economic Association, vol. 31(3), pages 67-92.
    6. Alisher Akhmedjonov & Irina N. Il’ina & Carol S. Leonard & Zafar Nazarov & Evgenij E. Plisetskij & Elena S. Vakulenko, 2013. "Russia’s regions: governance and Well-being, 2000-2008," HSE Working papers WP BRP 42/EC/2013, National Research University Higher School of Economics.
    7. World Bank Group, 2016. "Russian Economic Report, No. 35, April 2016," World Bank Other Operational Studies 24028, The World Bank.
    8. Alexander Muravyev & Aleksey Oshchepkov, 2013. "Minimum wages and labor market outcomes: evidence from the emerging economy of Russia," HSE Working papers WP BRP 29/EC/2013, National Research University Higher School of Economics.
    9. Muravyev, Alexander & Oshchepkov, Aleksey, 2013. "Minimum Wages, Unemployment and Informality: Evidence from Panel Data on Russian Regions," IZA Discussion Papers 7878, Institute for the Study of Labor (IZA).
    10. H. Lehmann & M. G. Silvagni, 2013. "Is There Convergence of Russia’s Regions? Exploring the Empirical Evidence: 1995 – 2010," Working Papers wp901, Dipartimento Scienze Economiche, Universita' di Bologna.
    11. Torbenko, Alexander, 2014. "Interregional Inequality and Federal Expenditures and Transfers in Russia," MPRA Paper 59076, University Library of Munich, Germany.
    12. Elena Vakulenko, 2016. "Does migration lead to regional convergence in Russia?," International Journal of Economic Policy in Emerging Economies, Inderscience Enterprises Ltd, vol. 9(1), pages 1-25.
    13. Vakulenko, Elena, 2015. "Analysis of the relationship between regional labour markets in Russia using Okun’s model," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 40(4), pages 28-48.
    14. Alexander S. Skorobogatov, 2016. "Spatial Equilibrium Approach to the Analysis of Income Differentials Across Russian Cities," HSE Working papers WP BRP 149/EC/2016, National Research University Higher School of Economics.
    15. repec:taf:regstd:v:50:y:2016:i:11:p:1849-1862 is not listed on IDEAS
    16. repec:esx:essedp:729 is not listed on IDEAS
    17. Aldashev, Alisher & Dietz, Barbara, 2014. "Economic and spatial determinants of interregional migration in Kazakhstan," Economic Systems, Elsevier, vol. 38(3), pages 379-396.
    18. Vera Ivanova, 2015. "How Space Channels Wage Convergence: The Case of Russian Cities," HSE Working papers WP BRP 120/EC/2015, National Research University Higher School of Economics.
    19. Irina N. Ilina & Carol S. Leonard & Evgenij E. Plisetskij, 2014. "Russian Regional Resilience: Finance, Cooperation And Resource Abundance (A Case Study Of Khanty-Mansiysk)," HSE Working papers WP BRP 15/PA/2014, National Research University Higher School of Economics.
    20. Markus Eller & Jarko Fidrmuc & Zuzana Fungáčová, 2016. "Fiscal Policy and Regional Output Volatility: Evidence from Russia," Regional Studies, Taylor & Francis Journals, vol. 50(11), pages 1849-1862, November.
    21. Vladimir Hlasny, 2017. "Different Faces of Inequality across Asia: Decomposition of Income Gaps across Demographic Groups," LIS Working papers 691, LIS Cross-National Data Center in Luxembourg.
    22. Vera Ivanova, 2015. "The well-being of Russian cities: does location matter?," ERSA conference papers ersa15p956, European Regional Science Association.
    23. Alexander Torbenko, 2014. "Interregional Inequality and Federal Expenditures and Transfers in Russia," ERSA conference papers ersa14p82, European Regional Science Association.

    More about this item


    Convergence; economic growth; Russian regions; financial development; migration.;

    JEL classification:

    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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