Influence of climate change on the prospects of increasing rural labor costs in Russian regions

Abstract

The paper proposes the methodology for estimating the effect of climate change on the prospects of increasing agricultural workers ’ wages and the stocks reserved for wages, providing this capacity is employed. The methodology relies on the scenario analysis, which is conducted using the economic model of partial equilibrium in the agricultural markets of Russia’s regions (federal subjects). The capability of increasing agricultural workers ’ wages is measured by means of the shadow prices of regional agricultural labor resources. It has been found that in the majority of the federal subjects the wages in agriculture are economically reasonable and the same situation extends to the modelled warming scenario. However, 21 federal subjects are characterized by the unused capacity of wages increase in agriculture. The prevailing influence of climate warming on this capacity is negative for all but five regions (federal subjects), where the effect is opposite. The largest positive effect is possible in the Orel region and Zabaykalsky krai. The study entails two practical conclusions: it is recommended, first, to eliminate obstacles to the use of the existing capabilities for higher wages, including those that emerge due to the failures in risk management; second, to proactively respond to reduced demand in agricultural workers caused by warming via distributing the funds aimed at developing alternative labor and entrepreneurship opportunities according to the expected labor demand reduction in a particular region.