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

Using unique data from a supplement to the RLMS on displaced workers in Russia and from the Ukrainian Longitudinal Monitoring Survey (ULMS) we analyze 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 amounting to between 2.5 and 3 percent of employment in Russia and between 2 and 5 percent 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 not generous or non-existent for the average worker long spells of non-employment can impose large monetary costs on workers. Presenting cumulative return rates for job movers we point to these costs by highlighting the fact that there is a very sizable privileged group of displaced workers who finds a new job within a very short time while 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 labor market, that should be the target of social policy intervention by the Russian and Ukrainian governments.