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Labour market flows and adjustment to macroeconomic shocks in the Baltic States


  • Raul Eamets


This article presents a comparison of worker flows in all three Baltic labour markets before and after the 1998 Russian crisis. Our evidence helps us to understand the micro impacts of macroeconomic shocks in the late-transition countries and sheds light on labour market flexibility in the Baltic states. While there has been much research on the labour markets of transition economies, including Estonia, the other two Baltic economies have been largely left out so far. In spite of the common assumption viewing the three Baltic countries as one homogeneous group, we find the Russian crisis had dramatically different effects across the three labour markets. As a result of the crisis, the Estonian outflow from unemployment declined and the unemployment pool became more stagnant. In contrast, in Latvia the unemployment outflow remained relatively high, but there was an increase in the inflow to inactivity. One explanation for this situation in Latvia, where unemployment has been substantially higher than in Estonia, is that the macroeconomic shock resulted in widespread worker discouragement.

Suggested Citation

  • 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.
  • Handle: RePEc:taf:pocoec:v:16:y:2004:i:1:p:47-71 DOI: 10.1080/1463137042000194843

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    References listed on IDEAS

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    Cited by:

    1. Yu Hsing, 2005. "Impacts of macroeconomic policies on the Latvian output and policy implications," Applied Economics Letters, Taylor & Francis Journals, vol. 12(8), pages 467-471.
    2. Mihails Hazans, 2007. "Looking for the workforce: the elderly, discouraged workers, minorities, and students in the Baltic labour markets," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 34(4), pages 319-349, September.
    3. Anna Baranowska-Rataj & Iga Magda, 2013. "Decomposition of trends in youth unemployment – the role of job accessions and separations in countries with different employment protection regimes," Working Papers 53, Institute of Statistics and Demography, Warsaw School of Economics.
    4. Tiongson, Erwin R. & Yemtsov, Ruslan, 2008. "Bosnia and Herzegovina 2001-2004 : enterprise restructuring, labor market transitions and poverty," Policy Research Working Paper Series 4479, The World Bank.
    5. Yu Hsing, 2005. "Effects of Macroeconomic Policies and Stock Market Performance on the Estonian Economy," Prague Economic Papers, University of Economics, Prague, vol. 2005(2), pages 109-116.
    6. Zuzanna Brzozowska, 2013. "Was falling fertility in the communist Poland driven by changes in women’s education?," Working Papers 54, Institute of Statistics and Demography, Warsaw School of Economics.
    7. Fares, Jean & Tiongson, Erwin R., 2007. "Youth unemployment, labor market transitions, and scarring : evidence from Bosnia and Herzegovina, 2001-04," Policy Research Working Paper Series 4183, The World Bank.
    8. Tyrowicz, Joanna & Van der Velde, Lucas, 2017. "Labor Reallocation and Demographics," IZA Discussion Papers 11249, Institute for the Study of Labor (IZA).
    9. Joanna Tyrowicz & Lucas van der Velde, 2014. "Can We Really Explain Worker Flows in Transition Economies?," Working Papers 2014-28, Faculty of Economic Sciences, University of Warsaw.
    10. 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.
    11. 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.

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