Spillover Effects of Sanctions on Migration and Remittances (the Case of Transition Economies)

This article aims to identify the effects of the economic sanctions against the Russian Federation on bilateral changes in migrant stock and remittance flows between this country and transition economies comprising twenty-seven countries of the former Soviet Union, and Central and Eastern Europe. We construct gravity models and use the Poisson pseudo-maximum likelihood (PPML) econometric technique to assess the impact over 2014–2019. Our research estimates that both Western and U.S. sanctions significantly reduced the flow of remittances to transition economies from Russia, increased the flow of remittances to Russia and contributed to a decline in the number of migrants in Russia. This paper analyzes the effects of sanctions imposed against individuals, entities, and sectors. The quantitative estimates suggest that each episode of individual/entity/sectoral Western sanction reduced the flow of remittances to transition economies by 1.0/2.0/2.9 (million USD) and the corresponding decline from U.S. sanctions was 0.4/0.8/1.2 (million USD). The flow of remittances to Russia from transition economies increased by 1.2/2.3/3.5 (million USD) and 0.5/1.0/1.4 (million USD), respectively. The decline in the number of migrants from transition economies corresponded to 5.1/10.1/15.2 (thousand individuals) and 2.6/5.1/7.7 (thousand individuals) per each episode of Western and U.S. sanctions, respectively.