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Labour Market Flexibility and Employment Protection Regulation in the Baltic States

  • Eamets, Raul

    ()

    (University of Tartu)

  • Masso, Jaan

    ()

    (University of Tartu)

There is increasing pressure for the flexibility of labour markets both in current EU member states and candidate countries. The paper aims to estimate the strictness of employment protection regulation, one of the most relevant aspects of labour market flexibility, and the degree of its actual enforcement, for the Baltic States. For the studies on CEE labour markets the novelty in our approach is that we use information from the applicable legislation as well as on the coverage of labour legislation and the practice of law enforcement. The analysis shows that, though overall EPL strictness is close to the average of EU countries, individual and collective dismissals are relatively heavily and temporary forms of employment relatively weakly regulated. Still, the effective flexibility is increased by larger share of less protected workers and problems with law enforcement, which may be the reason why employers’ estimates on the flexibility differ somewhat from the flexibility of formal legislation. The employment protection legislation seems not to have influenced the level of unemployment in the sample of CEE countries. However, it is possible that labour markets of Baltic States will become more rigid if the law enforcement improves, with possible adverse effects on labour market performance.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1147.

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Length: 37 pages
Date of creation: May 2004
Date of revision:
Handle: RePEc:iza:izadps:dp1147
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  1. Addison, John T. & Teixeira, Paulino, 2001. "The Economics of Employment Protection," IZA Discussion Papers 381, Institute for the Study of Labor (IZA).
  2. Philippe Aghion & Olivier J. Blanchard, 1994. "On the Speed of Transition in Central Europe," NBER Chapters, in: NBER Macroeconomics Annual 1994, Volume 9, pages 283-330 National Bureau of Economic Research, Inc.
  3. Olivier Blanchard & Justin Wolfers, 1999. "The Role of Shocks and Institutions in the Rise of European Unemployment: The Aggregate Evidence," NBER Working Papers 7282, National Bureau of Economic Research, Inc.
  4. Michèle Belot & Jan C. van Ours, 2004. "Does the recent success of some OECD countries in lowering their unemployment rates lie in the clever design of their labor market reforms?," Oxford Economic Papers, Oxford University Press, vol. 56(4), pages 621-642, October.
  5. repec:dgr:kubcen:200040 is not listed on IDEAS
  6. Paul Geroski & Paul Gregg & John van Reenen, 1995. "Market Imperfections and Employment," OECD Jobs Study Working Papers 5, OECD Publishing.
  7. Tiiu Paas & Raul Eamets & Jaan Masso & Marit Room, 2003. "Labour Market Flexibility And Migration In The Baltic States: Macro Evidences," University of Tartu - Faculty of Economics and Business Administration Working Paper Series 16, Faculty of Economics and Business Administration, University of Tartu (Estonia).
  8. Dean Baker & Andrew Glyn & David Howell & John Schmitt, 2002. "Labor Market Institutions and Unemployment: A Critical Assessment of the Cross-Country Evidence," SCEPA working paper series. SCEPA's main areas of research are macroeconomic policy, inequality and poverty, and globalization. 2002-17, Schwartz Center for Economic Policy Analysis (SCEPA), The New School.
  9. Giuseppe Nicoletti & Stefano Scarpetta & Olivier Boylaud, 2000. "Summary Indicators of Product Market Regulation with an Extension to Employment Protection Legislation," OECD Economics Department Working Papers 226, OECD Publishing.
  10. Blanchard, Olivier & Jimeno, Juan F, 1995. "Structural Unemployment: Spain versus Portugal," American Economic Review, American Economic Association, vol. 85(2), pages 212-18, May.
  11. Bentolila, Samuel & Saint-Paul, Gilles, 1992. "The macroeconomic impact of flexible labor contracts, with an application to Spain," European Economic Review, Elsevier, vol. 36(5), pages 1013-1047, June.
  12. Giuseppe BERTOLA & Tito BOERI & Sandrine CAZES, 2000. "Employment protection in industrialized countries: The case for new indicators," International Labour Review, International Labour Organization, vol. 139(1), pages 57-72, 03.
  13. Giuseppe Nicoletti & Andrea Bassanini & Ekkehard Ernst & Sébastien Jean & Paulo Santiago & Paul Swaim, 2001. "Product and Labour Markets Interactions in OECD Countries," OECD Economics Department Working Papers 312, OECD Publishing.
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