Market entry in Russian regions: The impact of unemployment

TERRA ECONOMICUS, , Vol. 21 (no. 2),

The paper is aimed at assessing the impact of unemployment on commercial firms’ entry in Russian regions. Despite the downward trend in the unemployment rate in 2005–2021 in 80 Russian regions, its abnormal growth is recorded under external and internal shocks during crisis periods. Given significant interregional differentiation, the average regional unemployment rate at 7% a quite high indicator. For 17 years, in most Russian regions newly established business experienced negative growth rates. I propose an econometric model with fixed regional effects, and show significant negative impact of the regional unemployment rate on new companies’ entry. The current low unemployment rate in Russia in 2023 (3,5%) is due to long-term trends, including decrease in working-age population, raised outputs by the military-industrial complex, migration processes, as well as the partial military mobilization of economically active population. Due to the disruption of production chains as a consequence of Russian market exits, the regional disproportions in the labor market, combined with related emerging trends, may negatively affect entrepreneurial activity and job creation. The anti-crisis program of the Russian Government in 2022 provides a framework for solving the current problems of supporting employment and stimulating entrepreneurship in the regions.
Citation: Zazdravnykh A. (2023). Market entry in Russian regions: The impact of unemployment. Terra Economicus 21(2), 38–54 (in Russian). DOI: 10.18522/2073-6606-2023-21-2-38-54

Keywords: unemployment; labor market; entrepreneurship; firm dynamics; entry of new firms; regional economy; economic policy

JEL codes: Е24, L16, L51, R11

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Publisher: Southern Federal University
Founder: Southern Federal University
ISSN: 2073-6606