Policy Research Working Paper 9107 Public Disclosure Authorized Free Movement and Affordable Housing Public Preferences for Reform in Uzbekistan Public Disclosure Authorized William Seitz Public Disclosure Authorized Public Disclosure Authorized Poverty and Equity Global Practice January 2020 Policy Research Working Paper 9107 Abstract Uzbekistan has one of the lowest rates of internal migration The results show that about 90 percent of people support in the world, leading to persistent economic imbalances. lifting all registration restrictions and over 80 percent favor Drawing from a unique monthly panel survey called Listen- increasing urban housing construction. The results of the ing to the Citizens of Uzbekistan and a survey experiment, experiment show that reform popularity increases when this paper focuses on two factors that prevent domestic propiska rules and housing costs are referenced in randomly mobility: (i) restrictive propiska registration policies, and assigned vignettes. However, views may also be sensitive (ii) the exceptionally high cost of urban housing. Registra- to perceptions of fairness. Recent high-profile involun- tion rules prohibit migration to urban centers, and urban tary demolitions coincided with a doubling of the share housing costs push up the cost of living to as much as 550 responding that policies are unfair. The increase was fur- percent of the national average, levels severely unaffordable ther associated with declining optimism and lower support for almost all rural residents. But the proposed government for the wider government national development program, reforms in 2019 to address these challenges are very popular. beyond urbanization issues. This paper is a product of the Poverty and Equity Global Practice. It is part of a larger effort by the World Bank to provide open access to its research and make a contribution to development policy discussions around the world. Policy Research Working Papers are also posted on the Web at http://www.worldbank.org/prwp. The author may be contacted at [email protected]. The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent. Produced by the Research Support Team Free Movement and Affordable Housing Public Preferences for Reform in Uzbekistan William Seitz1 JEL: J61; J68; J83; O18; R21; R31 Keywords: Domestic migration, urbanization, propiska, housing, demolitions, housing affordability 1 Poverty and Equity Global Practice, the World Bank; [email protected]. I am very grateful for comments and suggestions provided by Ivailo Izvorski, Somik Lall, and Gabriel Demombynes, as well as to Sevilya Muradova and Avralt-Od Purevjav for research assistance and feedback. Any errors are my own. 1 Contents I – Introduction ................................................................................................................................................................... 4 II – Data ............................................................................................................................................................................... 8 III – Domestic Migration ................................................................................................................................................ 10 III.I – “Propiska” Registration ................................................................................................................................... 18 III.II – Housing and Cost-of-Living ......................................................................................................................... 22 IV – Reform Preferences ................................................................................................................................................. 36 V – Views on Fairness and Support for Reform ......................................................................................................... 40 VI – Conclusions .............................................................................................................................................................. 44 VII – References ............................................................................................................................................................... 45 Appendix A – Implementation of the Propiska System in Uzbekistan ................................................................... 48 Appendix B – Constructing Cost-of-Living Indexes .................................................................................................. 50 Appendix C – Cost-of-Living Indexes .......................................................................................................................... 54 Appendix D – Calculating Housing Demand Elasticity ............................................................................................. 55 Appendix E – Descriptive Statistics .............................................................................................................................. 56 Appendix F – Reweighting and Attrition ...................................................................................................................... 60 Appendix G – Policies and Announcements on Propiska Issued in 2017-2019 .................................................... 63 2 Tables Table 1: Official Permanent Migration Flows, 2018 ................................................................................................... 13 Table 2: Estimated of Non-permanent Registration Status Mahalla Records and Implied Population Totals . 19 Table 3: Housing Units and Population by Province, 2018 ....................................................................................... 23 Table 4: Uzbekistan Cities Median Multiple Affordability Measures vs. International Cities .............................. 28 Table 5: Description of Experiment Treatment and Control Arms ......................................................................... 38 Table 6: Experiment Results ........................................................................................................................................... 39 Table 7: Descriptive OLS Regression on Fairness of Policy for Current Homeowners ...................................... 42 Table 8: Panel Regression with Random Effects on Fairness of Policy for Current Homeowners ................... 43 Table 9: Estimated Food-based, Food + Rent-based, and Food + Standard Rent-based Indexes by Region and by Rural and Urban areas (National Average = 100%) ...................................................................................... 54 Table 10: Distribution of Mahallas and Population in Rural and Urban Areas of Uzbekistan in 2018 (At Baseline) .............................................................................................................................................................................. 56 Table 11: Official Population Estimates by region and year, in 100,000s ............................................................... 57 Table 12: Descriptive Statistics of Random Sample of 200 Surveyed Mahallas ..................................................... 58 Table 13: Survey Sample and Descriptive Statistics .................................................................................................... 59 Table 14: Probit Regression on Refusal to Participate................................................................................................ 61 Table 15: Reweighted Descriptive Statistics for the Last Round in Comparison to Baseline .............................. 61 Figures Figure 1: World Development Indicators: Share of Agricultural Employment Out of Total Employment vs Log GDP for Select Countries ......................................................................................................................................... 5 Figure 2:Urban Population Share of Select Countries .................................................................................................. 5 Figure 3: Small Area Estimates of Mean Consumption Per Capita in Districts of Uzbekistan (2011 $PPP) .... 11 Figure 4: Five-Year Raw Domestic (Internal) Migration Rates ................................................................................. 15 Figure 5: Domestic Mobility as Measured by Current Residence Migration History ............................................ 16 Figure 6: Place of Origin and the Primary Reason for Migration ............................................................................. 17 Figure 7: Cost of Living by Region (100%=National Average) ................................................................................ 24 Figure 8: Rate of Housing Growth, in Sq. Meters ....................................................................................................... 25 Figure 9: Imputed Rent Share of Total Consumption, 2018