Statistical Assessment of Relationships Between Labor Market Indicators and Inflation in the Russian Economy

Purpose of the study. Analysis of inflationary factors associated with the labor market and employment is usually limited to the study of the relationship between the consumer price index and the Phillips curve. Therefore, the study examines the potential impact of a wider range of labor and employment market indicators on inflationary processes in the Russian economy. The purpose of the paper is to identify and assess the links between unemployment, on the one hand, and indicators of the labor market, employment, and incomes of the population in the national economy of Russia.

Materials and methods. The study used the author’s hypothesis about the possibility of influ-encing inflation not only by unemployment, but also by other indicators of the labor market, such as the share of informal employment or the average working hours per week. The research also studied the impact of the labor market not only on the consumer price index, but also on the basic consumer price index (cleared of the influence of seasonal and administrative factors). The monthly data of the Federal State Statistics Service of the Russian Federation for 2016-2020 were used in Russia as a whole. We useda standard apparatus for searching and measuring cause-and-effect relationships (ma-trices of paired correlation coefficients, regression analysis).

Results. In the short term, the level of labor force participation and economic activity have a positive relationship with inflation, as they are even lower than the level that could cause inflationary pressure (according to the second order polynomial). In 2017-2018 inflation was positively influ-enced by the size of the nominal accrued wages and the average number of hours worked per week. The traditional impact of the population income and aggregate demand on inflation has manifested itself. But it was insignificant (up to 10 % of inflation variance). This effect occurs only in those years when there are no more powerful inflationary factors. Consequently, cost inflation was fairly limited. In the short term, in some years, there is also a certain positive relationship between the share of people employed in the informal sector and the consumer price index. The rise in the infla-tionary tax on businesses without market power is forcing the majority of workers to be hired infor-mally. In the long term, an increase in the level of labor force participation explains part of the vari-ance of the basic consumer price index (but not related to the general consumer price index). With an increase in economic activity and income, the population acquires a wider range of goods, prices for which are not seasonal and are not administratively regulated.

Conclusion. In general, the factors of the labor market and the population’s income are not de-cisive for inflation in the Russian economy, but they explain some of the changes. In the future, it is possible to build more accurate models in which indicators such as the level of labor supply can take a certain place next to the main inflationary factors. The findings of the study can be used when mak-ing decisions in the field of labor market regulation in conjunction with monetary policy.

inflation, unemployment, labor market, Russian economy, employment of the population, income of the population, informal employment, consumer price index

1. Gafarov B.N. Phillips Curve and the Formation of the Labor Market in Russia. Ekonomicheskiy zhurnal VSHE = HSE Economic Journal. 2011; 15; 2: 155–176. (In Russ.)

2. Kordero KH.M. Control of inflation based on the Phillips curve. Vestnik Sankt-Peterburgskogo universiteta. Ekonomika = Bulletin of St. Petersburg University. Economy. 2012; 4: 33–42. (In Russ.)

3. Sokolova A.V. Inflationary expectations and the Phillips curve: an estimate based on Russian data. Den’gi i kredit = Money and credit. 2014; 11: 61–67. (In Russ.)

4. Gorid’ko N.P., Nizhegorodtsev R.M. Regression modeling of the relationship between inflation and unemployment for the regions of the North and the Arctic. Drukerovskiy vestnik = Drukerovskiy Vestnik. 2015; 4: 37–58. DOI: 10.17213/2312-6469-2015-4-37-58. (In Russ.)

5. Il’yashenko V.V. The relationship between inflation and unemployment: theoretical aspects and features of manifestation in the Russian economy. Izvestiya Ural’skogo gosudarstvennogo ekonomicheskogo universiteta = News of the Ural State University of Economics. 2016; 2: 5–11. (In Russ.)

6. Shevchenko I.V., Korobeynikova M.S. The influence of macroeconomic indicators of the Phillips curve on economic growth: regulation, measures, limits, opportunities at the present stage. Regional’naya ekonomika: teoriya i praktika = Regional economy: theory and practice. 2017; 15; 10: 1868–1893. DOI: 10.24891/re.15.10.1868. (In Russ.)

7. Yegorov D.A. Is the Phillips curve with labor costs relevant to the Russian economy? Audit i finansovyy analiz = Audit and financial analysis. 2017; 2: 73–82. (In Russ.)

8. Kuznetsova O.A., Zuyeva M.S., Yarygina A.A. Revealing the regression dependence for the main macroeconomic indicators during the crisis periods of the Russian Federation. Prikladnaya matematika i voprosy upravleniya = Applied Mathematics and Management Issues. 2017; 1: 70–80. (In Russ.)

9. Mavlyutov M.K., Orlov YU.N. NAIRU estimation methods and Phillips curve for Russia in 2002–2016. Trudy mezhdunarodnoy nauchnoy konferentsii SRT1617 = Proceedings of the international scientific conference CPT1617. Protvino: ANO “Institute of Physical and Technical Informatics; 2017: 267–270. (In Russ.)

10. Averina D.S., Gorshkova T.G., Sinel’nikova-Muryleva Ye.V. Plotting the Phillips Curve on Regional Data. Ekonomicheskiy zhurnal VSHE = HSE Economic Journal. 2018; 22; 4: 609–630. DOI: 10.17323/1813-8691-2018-22-4-609-630. (In Russ.)

11. Zubarev A.V. On the assessment of the Phillips curve for the Russian economy. Ekonomicheskiy zhurnal VSHE = HSE Economic Journal. 2018; 22; 1: 40–58. DOI: 10.17323/1813-8691-2018-22-1-40-58. (In Russ.)

12. Sinel’nikov-Murylev S.G., Perevyshin YU.N. Trunin P.V. Trunin Differences in consumer price growth rates in Russian regions. Empirical analysis. Ekonomika regiona = Economy of the region. 2020; 16; 2: 479–493. DOI: 10.17059/2020-2-11. (In Russ.)

13. Friedman M. Unemployment versus Inflation? An Evaluation of the Phillips Curve. In: Issues in Monetary Policy: The Relationship between Money and the Financial Markets. Edited by Kent Matthews and Philip Booth. New York: John Wiley & Sons; 2006: 159–170.

14. Dorn J. The Phillips Curve: A Poor Guide for Monetary Policy. Cato Journal. 2020; 40; 1: 133–151. DOI:10.36009/CJ.40.1.8.

15. Ireland P. Economic Conditions and Policy Strategies: A Monetarist View. Cato Journal. 2019; 39; 1: 51–63.

16. Li J., Lin Z. Social Benefit Expenditures and Stagflation: Evidence from the United States. Applied Economics. 2016; 48: 5340–5347. DOI: 10.1080/00036846.2016.1176118.

17. Karanassou M., Sala H., Snower D. Long-Run Inflation-Unemployment Dynamics: The Spanish Phillips Curve and Economic Policy. Journal of Policy Modeling. 2008; 30; 2: 279–300. DOI: 10.1016/j.jpolmod.2007.04.002.

18. Dritsaki C., Dritsaki M. Phillips curve inflation and unemployment: an empirical research for Greece. International Journal Computational Economics and Econometrics. 2013; 3; 1: 27–42.

19. Ho S.-Y., Njindan Iyke B. Unemployment and Inflation: Evidence of a Nonlinear Phillips Curve in the Eurozone. MPRA Paper 87122. Germany: University Library of Munich; 2018. Available from: https://ideas.repec.org/p/pra/mprapa/87122.html. (cited 20.05.2021).

20. Zayed N., Islam R., Hasan R. Testing Phillips Curve to Examine the Inflation Rate Regarding Unemployment Rate, Annual Wage Rate and Gdp of Philippines: 1950-2017. Academy of Accounting and Financial Studies Journal. 2018; 22; 5. DOI: 1528-2635-22-5-292.

21. Omerčević E., Nuroğlu E. Phillips and Wage Curves: Empirical Evidence from Bosnia and Herzegovina. Economics Research International. 2014. DOI: 10.1155/2014/436527.

22. Haider M., Dutta C. Inflation–Unemployment Trade-off: Evidence from Bangladesh Economy. Asia-Pacific Journal of Management Research and Innovation. 2012; 8; 3: 227–237. DOI: 10.1177/2319510X1200800302.

23. Andryukhin A.YU. Assessment of the relationship between unemployment and inflation in the Russian economy. Nauchnyy rezul’tat. Ekonomicheskiye issledovaniya = Scientific Result. Economic research. 2020; 6; 4: 13–24. DOI: 10.18413/2409-1634-2020-6-4-0-2. (In Russ.)

24. Gimpel’son V.Ye., Kapelyushnikov R.I. Russian model of the labor market: a test of the crisis. Zhurnal Novoy ekonomicheskoy assotsiatsii = Journal of the New Economic Association. 2015; 2: 249–254. (In Russ.)

25. Kapelyushnikov R.I. The Russian Labor Market Model: What’s Ahead? Voprosy ekonomiki = Economic Issues. 2003; 4: 83–100. (In Russ.)

26. Lyashok V.YU. Labor market: features of national adaptation. Ekonomicheskoye razvitiye Rossii = Economic development of Russia. 2016; 23; 3: 86–88. (In Russ.)

27. Bil’chinskaya S.G., Syul’zhin I.N., Chernyavskiy YU.A., Shabinskaya Ye.V. Regression two-component analysis of the inflationary component in the system indicators of the economic activity of the regions. Vestnik Kamchatskogo gosudarstvennogo tekhnicheskogo universiteta = Bulletin of the Kamchatka State Technical University. 2016; 3-8: 90–99. (In Russ.)

28. Yurevich M.A. Forecast estimates of labor productivity growth and its impact on the main macroparameters of the Russian economy. Ekonomika. Nalogi. Pravo = Economics. Taxes. Right. 2019; 12; 6: 69–76. DOI: 10.26794/1999-849X2019-12-6-69-76. (In Russ.)

29. Loginov A.L. The cost approach: the relationship between interest rates, inflation, employment, wages and asset prices. Agroprodovol’stvennaya politika Rossii = Agro-food policy of Russia. 2018; 2: 28–34. (In Russ.)

30. Ivanova M.A. Analysis of the nature of the causal relationship between inflation and wages in Russia. Problemy prognozirovaniya = Problems of forecasting. 2016; 5: 119–132. (In Russ.)

31. Dokhody, uroven’ bednosti i dokhodnogo neravenstva naseleniya. V kn.: Rossiyskaya ekonomika v 2018 godu. Tendentsii i perspektivy. Vypusk 40 = Income, poverty level and income inequality of the population. In the book: Russian economy in 2018. Trends and Prospects. Issue 40. Moscow: Gaidar Institute Publishing House; 2019: 333–339. (In Russ.)

32.