Labor Shortage: A Stimulus or a Constraint on Investment by Russian Enterprises?
https://doi.org/10.18288/1994-5124-2025-6-36-67
Abstract
The challenges in the Russian economy due to the labor market can have multidirectional effects on investment. A stimulus to investment might come from the adoption of labor-saving technologies and the resulting substitution of capital for labor. However, a constraint might be imposed by inability to hire labor to operate the newly acquired equipment. This paper presents a study of the impact of labor shortages on the investments made by enterprises in Russia as revealed in regular surveys of non-financial organizations conducted by the Central Bank of Russia. This analysis indicates that a diminishing labor supply is a factor that is increasing investment in the Russian economy. That this result is robust across different equations, evaluation methods, and initial datasets suggests that the investments are labor-saving in nature and supports the conclusion that capital is being substituted for labor. This effect is observed across all federal administrative districts and is most prevalent at industrial and trade enterprises, as well as at large and medium-sized businesses. The importance of labor shortages for investment in Russian businesses trended upward from 2019 to 2023. The need to compensate for lack of additional labor by increasing capital intensity in order to boost production volumes largely explains the low sensitivity of business investment to foreign exchange and monetary policy shocks and even to risk in general. The article’s findings suggest that inflationary pressure from the labor market will potentially subside in the medium and long term even as demographic trends continue to be negative.
Keywords
staff shortages,
investment activity,
surveys of enterprises,
instrumental variable method,
logit model
JEL: С33, C35, C36, D22, E24, J21
About the Authors
L. V. Antosik
Southern Main Branch of the Central Bank of the Russian Federation
Russian Federation
Russian Federation
Lyubov V. Antosik, Cand. Sci. (Econ.), Department Head
12, Nikolaya Kondratenko ul., Krasnodar, 350000
K. A. Tumanyants
Southern Main Branch of the Central Bank of the Russian Federation
Russian Federation
Russian Federation
Karen A. Tumanyants, Cand. Sci. (Econ.), Economic Advisor
12, Nikolaya Kondratenko ul., Krasnodar, 350000
A. V. Belaya
Southern Main Branch of the Central Bank of the Russian Federation
Russian Federation
Russian Federation
Anastasia V. Belaya, Economist
12, Nikolaya Kondratenko ul., Krasnodar, 350000
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Review
For citations:
Antosik L.V., Tumanyants K.A., Belaya A.V. Labor Shortage: A Stimulus or a Constraint on Investment by Russian Enterprises? Economic Policy. 2025;20(6):36-67. (In Russ.) https://doi.org/10.18288/1994-5124-2025-6-36-67
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