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The Incidence and Cost of Job Loss in a Transition Economy: Displaced Workers in Estonia, 1989-1999

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  • Lehmann, Hartmut

    ()
    (University of Bologna)

  • Philips, Kaia

    ()
    (University of Tartu)

  • Wadsworth, Jonathan

    ()
    (Royal Holloway, University of London)

Abstract

We examine the pattern and costs of worker displacement in one of the more reform- oriented transition countries, Estonia, as the transition process develops. Using Labour Force Survey data covering the period 1989-1999, we show that after the initial shock, displacement rates in Estonia have fallen back to levels observed in several western economies, as the economy picks up. The incidence of displacement is also similar to that in the West – concentrated on the less skilled and those with short job tenure. Roughly half of those displaced find re-employment within two months while the other half lingers on in the state of non-employment. There is less evidence however of a wage penalty to job loss, unlike in some Western countries, a fact one might attribute more to the nature of the transition process than to wage setting institutions in Estonia. The main cost of displacement is then the income loss due to non-employment, which is severe for a minority of workers who experience long-term non-employment.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 567.

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Length: 51 pages
Date of creation: Sep 2002
Date of revision:
Publication status: published in: Journal of Comparative Economics, 2005, 33 (1), 59-87
Handle: RePEc:iza:izadps:dp567

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Keywords: labour markets in transition; displaced workers;

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  1. Aghion, Philippe & Howitt, Peter, 1991. "Growth and Unemployment," CEPR Discussion Papers, C.E.P.R. Discussion Papers 577, C.E.P.R. Discussion Papers.
  2. Tito Boeri & Katherine Terrell, 2002. "Institutional Determinants of Labor Reallocation in Transition," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 16(1), pages 51-76, Winter.
  3. Hartmut Lehmann & Jonathan Wadsworth, 2000. "Tenures that shook the world: Worker Turnover in Russia, Poland and Britain," LICOS Discussion Papers, LICOS - Centre for Institutions and Economic Performance, KU Leuven 9500, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
  4. Pfann, Gerard A., 2001. "Downsizing," IZA Discussion Papers 307, Institute for the Study of Labor (IZA).
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  6. Haltiwanger, John C. & Vodopivec, Milan, 2002. "Gross worker and job flows in a transition economy: an analysis of Estonia," Labour Economics, Elsevier, Elsevier, vol. 9(5), pages 601-630, November.
  7. Kiefer, Nicholas M, 1988. "Economic Duration Data and Hazard Functions," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 26(2), pages 646-79, June.
  8. Neal, Derek, 1995. "Industry-Specific Human Capital: Evidence from Displaced Workers," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 13(4), pages 653-77, October.
  9. Louis S. Jacobson & Robert J. LaLonde & Daniel Sullivan, 1992. "Earnings Losses of Displaced Workers," Upjohn Working Papers and Journal Articles, W.E. Upjohn Institute for Employment Research 92-11, W.E. Upjohn Institute for Employment Research.
  10. John Baldwin & Timothy Dunne & John Haltiwanger, 1994. "A Comparison of Job Creation and Job Destruction in Canada and the United States," NBER Working Papers 4726, National Bureau of Economic Research, Inc.
  11. Davis, Steven J. & Haltiwanger, John, 1999. "Gross job flows," Handbook of Labor Economics, Elsevier, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 41, pages 2711-2805 Elsevier.
  12. Steven J. Davis & John C. Haltiwanger & Scott Schuh, 1998. "Job Creation and Destruction," MIT Press Books, The MIT Press, The MIT Press, edition 1, volume 1, number 0262540932, December.
  13. Alessandro Acquisti & Hartmut Lehmann, 2000. "Job Creation and Job Destruction in the Russian Federation," Trinity Economics Papers, Trinity College Dublin, Department of Economics 20001, Trinity College Dublin, Department of Economics.
  14. Lori G. Kletzer, 1998. "Job Displacement," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 12(1), pages 115-136, Winter.
  15. Evans, David S., 1986. "Tests of Alternative Theories of Firm Growth," Working Papers, C.V. Starr Center for Applied Economics, New York University 86-36, C.V. Starr Center for Applied Economics, New York University.
  16. Swati Basu & Saul Estrin & Jan Svejnar, 1997. "Employment and wage behaviour of industrial enterprises in transition economies: The cases of Poland and Czechoslovakia," The Economics of Transition, The European Bank for Reconstruction and Development, The European Bank for Reconstruction and Development, vol. 5(2), pages 271-287, November.
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Cited by:
  1. Lehmann, Hartmut & Pignatti, Norberto & Wadsworth, Jonathan, 2006. "The incidence and cost of job loss in the Ukrainian labor market," Journal of Comparative Economics, Elsevier, vol. 34(2), pages 248-271, June.
  2. H. Lehmann & A. Muravyev & T. Razzolini & A. Zaiceva, 2011. "The Wage and Non-wage Costs of Displacement: Evidence from Russia," Working Papers wp734, Dipartimento Scienze Economiche, Universita' di Bologna.
  3. Christev, Atanas & Kupets, Olga & Lehmann, Hartmut, 2005. "Trade Liberalization and Employment Effects in Ukraine," IZA Discussion Papers 1826, Institute for the Study of Labor (IZA).
  4. Lehmann, Hartmut & Muravyev, Alexander & Razzolini, Tiziano & Zaiceva, Anzelika, 2010. "The Costs of Job Loss in Russia," IZA Discussion Papers 5415, Institute for the Study of Labor (IZA).
  5. Kerly Krillo & Jaan Masso, 2010. "The Part-Time/Full-Time Wage Gap In Central And Eastern Europe: The Case Of Estonia," University of Tartu - Faculty of Economics and Business Administration Working Paper Series, Faculty of Economics and Business Administration, University of Tartu (Estonia) 65, Faculty of Economics and Business Administration, University of Tartu (Estonia).
  6. Jukka Appelqvist, 2007. "Wage and Earnings Losses of Displaced Workers in Finland," Discussion Papers, Government Institute for Economic Research Finland (VATT) 422, Government Institute for Economic Research Finland (VATT).

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