Estimating the Impact of a Russian Job Search Program Targeted on the Unemployed in Very Low-Income Families

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The countries of Eastern Europe have devoted considerable resources to active labor market programs (ALPs); those in the Commonwealth of Independent States (CIS), considerably less. For example, data for three of the Vizegrad countries for 1995/1996 suggest around 0.5 percent of GDP was spent on ALPs.¹ In contrast, in 1999 Russia's spending on all employment programs was only 0.21 percent of GDP; merely 18 percent of this went for ALPs (World Bank, 2002). Additionally, unemployment benefits were nugatory and often months late in being paid.²

Even for Eastern European countries, however, there have been few impact evaluations of active labor market programs. The analyses for Hungary, Poland, and the Czech Republic summarized in the monograph by Fretwell, Benus, and O'Leary (1999) constitute the major exception.³ This paper presents the results of an impact evaluation of an active labor market program pioneered in Perm, Russia and since employed by several additional jurisdictions. Because an early assessment of the Perm program indicated that it was very successful in placing workers in jobs (Alexandrova, Chagin, and Struyk, 2004), the program proved attractive to other jurisdictions. By 2003, the program had been adopted by a dozen cities in Perm Oblast and the capital city in another region. It is, therefore, important to evaluate the program rigorously before it is adopted more generally.

The next section provides background on ALPs in Russia. This is followed by a description of the Perm Benefit-to-Wages program. After this the evaluation is outlined and then the results presented. The paper finishes with some conclusions.

Notes from this section

1 Dar and Tzannatos (1999), Table 3.1; figures are provided for Hungary, Poland, and the Czech Republic.

2 Dmitriev and Maleva (1997) report that in mid-1997 the average unemployment benefit was about 67 percent of the subsistence income level (poverty line); but 43 percent of recipients received benefits equivalent to the minimum wage, or about 18 percent of the subsistence income (p.1520). Employment benefits are limited to 12-15 months and there is no provision under Federation laws for assistance for those who exhaust these benefits and are still unemployed. The persons rely on assistance from local governments. Also see Gimpel'son and Magun (1995); Javeline (2003).

3 For additional detail, see O'Leary (1997) and O'Leary et al. (1998). A general review of evaluation results of such programs is in Dar and Tzannatos 1999).

Note: This report is available in its entirety in the Portable Document Format (PDF).

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