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Anatomy of labour reserves in the Baltic countries: a snapshot 15 years after the EU accession

Author

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  • Olegs Krasnopjorovs

    (Bank of Latvia)

Abstract

This paper investigates internal and external labour reserves in Latvia, Estonia and Lithuania. We find considerable internal labour reserves in the form of still high natural rate of unemployment and in hidden unemployment as many economically inactive people are available for work but are not actively engaged in job seeking. The employment rate is particularly low for upper-middle-aged men, especially those without a tertiary education degree, which is likely to reflect a low incidence of lifelong learning, low digital skills and rapidly deteriorating health condition. We document low employment of youth, mirroring low prevalence of apprenticeships. In Lithuania and Latvia, there is also a postponed entry of young women into the labour market. Moreover, the employment rate of Estonian women of fertile age who hold a tertiary education degree is consistently lower than that of their EU counterparts. These internal labour reserves total more than 25 thousand people in Estonia, 55 thousand in Latvia and 85 thousand in Lithuania, corresponding to 4%–7% of the total employment in these countries. Particular targeting on ethnic minorities and people living in disadvantaged regions is essential for activating these labour reserves. Moreover, we point to considerable external labour reserves in the form of more than a half million Baltic nationals currently residing in wealthier EU countries.

Suggested Citation

  • Olegs Krasnopjorovs, 2019. "Anatomy of labour reserves in the Baltic countries: a snapshot 15 years after the EU accession," Discussion Papers 2019/02, Latvijas Banka.
  • Handle: RePEc:ltv:dpaper:201902
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    File URL: https://datnes.latvijasbanka.lv/papers/discussion/dp_2_2019-en.pdf
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    References listed on IDEAS

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    1. Robert C. Feenstra & Robert Inklaar & Marcel P. Timmer, 2015. "The Next Generation of the Penn World Table," American Economic Review, American Economic Association, vol. 105(10), pages 3150-3182, October.
    2. Ludmila Fadejeva & Olegs Krasnopjorovs, 2015. "Labour market adjustment during 2008-2013 in Latvia: firm level evidence," Working Papers 2015/02, Latvijas Banka.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    labour market; employment; unemployment; participation; migration;
    All these keywords.

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J82 - Labor and Demographic Economics - - Labor Standards - - - Labor Force Composition
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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