Long-Term Trend Employment Decline in Russian Agriculture and Countersanctions Policy: Was There Any Effect?

Since 2014, Russia is under the EU-sanction and counter-sanctions policies. Agri-food embargo as Russian restrictions on import of agriculture and food can be considered as an incentive for the development in agriculture. In 2015–2018, employment in agriculture stabilized although a continuous decline was observed over the past decades. We hypothesise that counter-sanctions had a positive effect on employment in the industry. We apply difference-in-difference approach and estimate the effect on panel data for the regions of Russia for 2005–2018. A positive effect of the agri-food embargo is revealed in 2016, when the number of people employed in agriculture increased by 3,2 percentage points. It is explained by the accelerated growth in agricultural output in 2015 and the lagged growth in industrial employment rate. In regions that are key producers of agricultural products, the impact of counter-sanctions on agricultural employment was lower relative to the other regions. This can be linked to lower developed production technologies demanded labour to a greater extent. Additionally in 2015, the effect of coun­ter-sanctions is found for the group of regions with a significant presence of agricultural holdings. This can be explained by their high financial and technological capabilities to adapt. For 2017 and 2018 no significant effect of counter-sanctions was found. Thus, the counter-sanctions had a positive but short-term impact on agricultural employment. We associate the short-term effect with the uncertainty of expectations regarding the length of the sanctions period, which prevents investment into the industry.