Abstract:

Following the military conflict in Eurasia, compounded by Western sanctions against Russia, and notably triggered by a significant policy announcement by the Russian government in late September 2022, a massive exodus of Russian immigrants to neighboring Kazakhstan occurred as they sought to avoid conscription. This exogenous migration shock provides unique natural experimental conditions for examining the impact of immigration on Kazakhstan’s labor market. While existing literature shows mixed results on the effects of immigration on local employment, this study offers new insights by investigating the 2022 Russian immigrants’ impact on informal employment among Kazakhstan’s native workforce through a quasi-experimental research design. We hypothesize that regions experiencing a surge in immigration (the treatment group) will witness a reduction in informal employment among local workers, in contrast to regions with fewer immigrants (the control group). Using individual-level monthly data from the Household Employment Survey of Kazakhstan, which is not publicly available, and applying the Difference-in-Differences method, this paper reveals a modest yet statistically significant decrease in the rate of informal employment among locals in the treatment area. Specifically, according to the baseline model, the inflow of immigrants led to a decrease in the proportion of informally employed local individuals by about 0.7 percentage points in the treatment region compared to the control region. This finding remains robust after controlling for demographic characteristics and including time fixed effects, further supported by placebo tests. Our results partially align with previous empirical studies, which focused on the influence of refugees on natives’ informal employment and found a similar negative effect but of a larger magnitude. This research contributes to a broader understanding of immigration’s impact on labor outcomes, enriching scholarly debates and policy considerations in Central Asian contexts.