Does flexible migration policy spur competitiveness in the labor market? A case of migrants in the Russian Federation

With the influx of labor migrants across the globe and developed countries being on the receiving end, countries like the Russian Federation have implemented strict migration policies to check the inflow of these migrants, mainly from low-income countries. However, with theoretical underpin the increase in labor migrants brings about competitiveness in the receiving countries’ labor market. The current study evaluates whether the Russian labor migration policy promotes competitiveness given the characteristics of labor migrants in Russia. The study carried out panel data analysis for 14 countries within Russian region and an aggregated data from the rest of the world using the non-stationary heterogeneous panel model and estimators of mean group and pooled mean group. The result first presents strong cointegration between wage levels and labor supply (immigrant, emigrants, and native workforce). The result then reveals a negative effect of immigrants’ inflow and native workforce on wage levels in the short run but a positive effect, in the long run, suggesting that the labor migrant’s inflow is imperfectly substitutable in the Russian labor market. The result also shows a positive effect of migration policy on wages both in the short and long run, indicating that the strict migration policy can hinder the competitiveness of the labor force in the labor market.