Henry Eisenhardt

Effects of annexation on unemployment: Synthetic control model of the 2014 Crimean annexation

Started Feb. 11, 2022

Abstract or project description

The employment rate is often used as an indicator of economic strength and thus it is important to consider how it is affected during external shocks to the labor market. In this paper, I examine how the 2014 annexation of Crimea impacted the unemployment rate in Ukraine. To model this situation and test for a significant difference in unemployment, a synthetic control model (SCM) is employed using economic data from several former Soviet Bloc countries similar to Ukraine over the last two decades. The SCM creates a counterfactual Ukraine in which an annexation of the Crimea region never occurred and allows for a comparison of the counterfactual’s unemployment rate to the actual unemployment rate experienced in Ukraine post-2014. The findings suggest that the annexation of Crimea from Ukraine in 2014 directly caused an increase in the unemployment rate in the years following.