Working papers

• Firm Employment Dynamics in Kazakhstan after Sudden Russian Immigration (with David DeRemer and Yelzhas Kadyr) [pdf] 

  • Abstract: Kazakhstan was the top destination country for Russian immigrants in 2022, a year when Russian emigration sharply increased due to new international sanctions and war mobilization. The circumstances offer a rare opportunity to explore how a large sudden skill-abundant immigration within an economic union affects firm employment dynamics for a middle-income receiving country. Kazakhstan and Russia share the world's longest continuous land border, so immigration effects are regionally dispersed rather than concentrated solely in cities, and Kazakhstan offers business registers data to explore firm-level employment dynamics. Absent fine regional data on immigration flows, our empirical approach uses a pre-war share of the Russian population in 215 districts of Kazakhstan as a reduced-form instrument for the treatment of Russian immigration. We find no pre-war trends in firm employment growth related to the Russian district population shares. Using difference-in-differences estimation, we find large effects of 2022 Russian immigration on the employment growth for Kazakhstan's incumbent firms in more affected regions. The employment growth is larger for smaller firms, foreign-owned firms, and ICT firms, and results are robust to the exclusion or inclusion of Kazakhstan's two major cities of Almaty and Astana. Our analysis reveals substantial growth in employment related to Russian immigration in incumbent firms and in Kazakhstan's regions outside the two major cities. We estimate that these regions would have experienced a private sector employment fall of 100,000 in 2022 rather than the actual increase of 20,000 if Russian immigration flows had not occurred.

• In the Shadows of Progress: Gender Inequality through the Lens of Firm Ownership (with Dinara Alpysbayeva and Galiya Sagyndykova) 

  • Abstract: This study exploits data on the gender-occupational composition of firms in Kazakhstan to explore how competing influences of gender norms result in distinct outcomes in foreign-owned and domestic-owned firms. While progress is evident in female workforce participation and declining gender pay gaps, gender-biased perceptions contribute to occupational and industry segregation. Despite foreign firms originating from nations with more progressive gender norms, foreign-owned firms display lower female representation and wider pay gaps, particularly in managerial roles. Notably, limited disparities appear in lower-level occupations. The findings also suggest that factors beyond productivity, such as workplace culture and discrimination, contribute to the observed gender pay gap, and regional variations indicate the potential influence of cultural context on gender norms.

• The Forced Friendships of Friend-Shoring: Firm-Level Evidence from the Eurasian Economic Union (with David DeRemer) 

Published

Journal articles:

• Wage dispersion and firm performance: evidence from Kazakhstan, 2023 (with Dinara Alpysbayeva, and Venkat Subramanian). International Journal of Manpower. [Journal page] 

  • Abstract: The aim of the paper is to explore within-firm vertical pay inequality and its relation to firm size and firm performance. Using firm-level microdata for Kazakhstan, the authors measure within-firm pay inequality as the wage differential between the top- and the bottom-level job occupations. The authors carry out their analysis based on panel regression models. The authors find that within-firm pay inequality increases as firms grow. Further, they identify that this trend is mainly driven by top-occupation workers receiving more significant wage increases compared to lower-level workers as firms expand. Once the authors address concerns about endogeneity, they find that pay inequality is negatively associated with firm performance. Developing strategies and policies that prioritize fairness and transparency in compensation practices is crucial during the expansion process of firms. By actively discouraging rent-seeking behavior, firms can create a work environment that promotes productivity and sustainability, ultimately leading to improved firm performance. The research findings highlight the importance of implementing context-specific interventions, recognizing that different environments may require tailored approaches to address pay inequality effectively. This study contributes to the study of within-firm pay inequality, firm size and performance in an emerging economy, an area that has been largely overlooked in previous empirical research. The contrasting findings show the importance of the structural and industrial characteristics of emerging markets that contribute to broader and deeper impact of pay inequality compared to developed economies.

• Increasing market power in Slovenia: Role of diverging trends between exporters and non‐exporters, 2020 (with Joze Damijan and Jozef Konings). The World Economy, 43(5), 1327-1345. [Journal page]    

  • Abstract: This paper documents the evolution of markups in a small open economy, Slovenia, using a comprehensive data set covering the full population of firms. It makes three novel contributions to the literature. First, in contrast to other work for Europe, we find that markups have increased from 1.05 to 1.19 between 1994 and 2015. Second, while other research so far found exporters typically to have higher markups, we find the opposite in Slovenia. Though the rise in markups occurs both with exporters and non-exporters, there is a consistent diverging trend in markups in favour of non-exporters since 1999. This can be attributed to increased competitive pressure faced by exporters following the comprehensive trade liberalisation after 1999 and their increased participation in global value chains. Third, we decompose aggregate markups and show that the increase in markups, for both exporters and non-exporters, is mainly driven by the within component rather than the reallocation effect. This suggests that all firms were increasing their markups, rather than high-markup firms increasing their market share over time. 

Book chapters: 

• Trade and Foreign Direct Investment in Uzbekistan, 2023 (with Jozef Konings). In Uzbekistan: Quality Job Creation as a Cornerstone for Sustainable Economic Growth, Asian Development Bank. [Book page] 

  • Abstract: The roles of international trade and FDI have become increasingly important in a globalized world. Uzbekistan is well behind in exploiting benefits from trade and FDI: since 1995, Uzbekistan’s share of total trade in gross domestic product has been the lowest of all Central Asian countries. The country has little engagement with regional and international groups, and is not a member of the Eurasian Economic Union or the World Trade Organization (WTO), but could increase its engagement. Greater integration is also possible through the gas pipelines from Turkmenistan to the People’s Republic of China, Kazakhstan, and the Russian Federation, including via the Belt and Road Initiative. The weighted average import tariff rate is still high in Uzbekistan compared with the average rates for Kazakhstan, the Kyrgyz Republic, and Tajikistan. The highest import tariff protection is for footwear, leather, apparel, and textile manufacturing, even though parts of these industries are among the country’s main exports. In addition, Uzbekistan attracts the least FDI inflows among Central Asian economies, and such flows have declined substantially in recent years. Moreover, the inflows are confined mainly to the extractive sector rather than flowing into a broad range of industries. Gradual trade liberalization will inevitably be associated with accession to the WTO, when the government completes that process. Further regional trade cooperation also would increase trade flows and result in more and better jobs and improved productivity growth. Opening up to regional and global trade requires more than just reducing high levels of import tariffs, however. Nontariff trade barriers may be even more of an issue, including cumbersome domestic regulations. Improving the business climate by deregulation would generate a more dynamic business environment, which would allow faster firm growth, attract more FDI, and generate more high-quality jobs. A single public-private or private agency could help promote export opportunities for domestic enterprises and attract investors by providing research on new market opportunities, measuring export capacities, and assisting with all regulatory aspects of establishing a new enterprise in Uzbekistan. Greater investments in transport infrastructure, human capital development, and research and innovation would increase the Uzbek economy’s competitiveness and diversity. 

Work in progress

• Emissions Reduction and Women’s Skill Upgrading in Kazakhstan’s Firms (with David DeRemer) 

• External Shocks, Industrial Policy and Regional Value Chain Upgrading in an Emerging Economy: the Case of Kazakhstan (with David DeRemer and Venkat Subramanian)

• Tax evasions and firm size distortions in Kazakhstan (with David Robinson and Venkat Subramanian)