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Looking for the workforce: the elderly, discouraged workers, minorities, and students in the Baltic labour markets

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  • Mihails Hazans

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Abstract

This paper looks at the evolution of the labour markets in Estonia, Latvia, and Lithuania since the beginning of transition (in some respects since 1996/1998) until 2003, with a particular focus on labour force participation. How did labour supply in the Baltic countries respond to changes in minimum wages, unemployment benefits and retirement regulation? Do the marked differences in labour market policies between the countries result in different patterns of participation? What are the obstacles to and driving forces of participation? We find that relative contribution of participation and demographic trends to the dynamics of the labour force varied substantially both over the years and across the three countries. Participation, in turn, has been shaped by sometimes complicated interaction between educational choices, retirement, policy changes, and external shocks. Resulting differences in trends and patterns are quite substantial, indicating that there is a room for increasing participation in each of the countries. Recent rates of transition from unemployment to employment and to inactivity are similar to those found in EU-15. Panel data analysis of determinants of participation and discouragement suggests that increasing after-tax real minimum wage has significant positive effect on participation and reduces discouragement in Lithuania. In Estonia, by contrast, positive effect of minimum wage on participation is found only for teenagers of both genders and for young males. Ethnic minorities, especially females, in all three Baltic countries are less likely to be in the labour force, other things equal.

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File URL: http://hdl.handle.net/10.1007/s10663-006-9029-5
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Bibliographic Info

Article provided by Springer in its journal Empirica.

Volume (Year): 34 (2007)
Issue (Month): 4 (September)
Pages: 319-349

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Handle: RePEc:kap:empiri:v:34:y:2007:i:4:p:319-349

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Web page: http://www.springerlink.com/link.asp?id=100261

Related research

Keywords: Labour supply; Discouraged workers; Minimum wages; Ethnic minorities; J14; J15; J22; P52;

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References

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  1. Kollo, J. & Fazekas, K., 1990. "Patterns of unemployment in hungary--a case study," Structural Change and Economic Dynamics, Elsevier, vol. 1(1), pages 103-118, June.
  2. Hazans, Mihails, 2005. "Unemployment and the earnings structure in Latvia," Policy Research Working Paper Series 3504, The World Bank.
  3. Charles Kroncke & Kenneth Smith, 1999. "The wage effects of ethnicity in Estonia," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 7(1), pages 179-199, March.
  4. Kertesi, Gabor & Kollo, Janos, 2003. "Fighting “Low Equilibria” by Doubling the Minimum Wage? Hungary’s Experiment," IZA Discussion Papers 970, Institute for the Study of Labor (IZA).
  5. Tito Boeri & Katherine Terrell, 2001. "Institutional Determinants of Labor Reallocation in Transition," William Davidson Institute Working Papers Series 384, William Davidson Institute at the University of Michigan.
  6. Rutkowski, Jan, 2003. "Rapid labor reallocation with a stagnant unemployment pool : the puzzle of the labor market in Lithuania," Policy Research Working Paper Series 2946, The World Bank.
  7. Huber, Peter, 2006. "Regional labor market developments in transition," Policy Research Working Paper Series 3896, The World Bank.
  8. Haltiwanger, John C. & Vodopivec, Milan, 2002. "Gross worker and job flows in a transition economy: an analysis of Estonia," Labour Economics, Elsevier, vol. 9(5), pages 601-630, November.
  9. Hazans, Mihails, 2003. "Determinants of inter-regional migration in the Baltic countries," ZEI Working Papers B 17-2003, ZEI - Center for European Integration Studies, University of Bonn.
  10. Raul Eamets, 2004. "Labour market flows and adjustment to macroeconomic shocks in the Baltic States," Post-Communist Economies, Taylor & Francis Journals, vol. 16(1), pages 47-71.
  11. Catherine Saget, 1999. "The determinants of female labour supply in Hungary," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 7(3), pages 575-591, November.
  12. Boeri, Tito, 2001. "Transition with Labour Supply," IZA Discussion Papers 257, Institute for the Study of Labor (IZA).
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Citations

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Cited by:
  1. Jaan Masso & K. Espenberg & Anu Masso & I. Mierina & Kaia Philips, 2013. "GINI Country Report: Growing Inequalities and their Impacts in the Baltic States Estonia, Latvia, Lithuania," GINI Country Reports baltics, AIAS, Amsterdam Institute for Advanced Labour Studies.
  2. Jos Van Ommeren & Mihails Hazans, 2008. "Workers' Valuation of the Remaining Employment Contract Duration," Economica, London School of Economics and Political Science, vol. 75(297), pages 116-139, 02.
  3. Kenneth Smith, 2011. "Labor force participation in the Soviet and post-Soviet Baltic States," Economic Change and Restructuring, Springer, vol. 44(4), pages 335-355, November.
  4. Mihails Hazans & Ija Trapeznikova & Olga Rastrigina, 2008. "Ethnic and parental effects on schooling outcomes before and during the transition: evidence from the Baltic countries," Journal of Population Economics, Springer, vol. 21(3), pages 719-749, July.
  5. Hazans, Mihails, 2011. "What explains prevalence of informal employment in European countries : the role of labor institutions, governance, immigrants, and growth," Policy Research Working Paper Series 5917, The World Bank.

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