The Informal Economy of Rostov Oblast on the Eve of the Ukrainian Refugee Crisis

Abstract

Using a stochastic frontier production function at the raion (county) level of aggregation, Rostov Oblast rural economy's formal economic growth 2009-2013 is analyzed in conjunction with satellite luminosity data capturing both the formal and informal economy. Satellite luminosity data reveal a growing economy with higher levels of secondary education, access to a federal highway and availability of natural gas associated with wealthier raions. The region's ability to absorb unregistered Ukrainian refugees with both the wealthiest and one of the poorest performing raions right on the Ukrainian border is questionable though on the eve of the crisis most raions exhibited a growing informal and formal economy.

Keywords: Efficiency, Informal economy, Regional economics, Refugees

JEL Classification: O17, O47, P27, R11