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Job creation and job destruction in Estonia: labour reallocation and structural changes

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  • Jaan Masso
  • Raul Eamets
  • Kaia Philips

Abstract

This paper documents and analyses gross job flows and their determinants in Estonia over the years 1995-2001, using a unique database from the Estonian Business Registry. This database contains all (including also micro and small firms) officially registered firms in Estonia, the total number being almost 52,000. There are several important findings in the paper. Our results show that job flows (job creation and job destruction rates) have been extremely high in Estonia and are comparable to the levels documented for the US. These rates have not decreased recently, although worker flows (transitions between labour market states) have dropped. We also found that the firm-specific component in job flows excess of employment change had relatively lower importance than in western studies due to the emergence of small and medium-sized enterprises and labour reallocation between the economic sectors. The high inter-sectoral mobility has helped maintain high levels of job flows, while both are high also due to a favourable institutional environment, especially due to low start-up costs and a large share of micro enterprises.

Suggested Citation

  • Jaan Masso & Raul Eamets & Kaia Philips, 2004. "Job creation and job destruction in Estonia: labour reallocation and structural changes," UCL SSEES Economics and Business working paper series 39, UCL School of Slavonic and East European Studies (SSEES).
  • Handle: RePEc:see:wpaper:39
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Jaan Masso & Urmas Varblane & Priit Vahter, 2010. "The Impact Of Outward Fdi On Home-Country Employment In A Low-Cost Transition Economy," World Scientific Book Chapters, in: David A Dyker (ed.), Network Dynamics In Emerging Regions Of Europe, chapter 16, pages 333-360, World Scientific Publishing Co. Pte. Ltd..
    2. Oznur Ozdamar & Eleftherios Giovanis & Sahizer Samuk, 2020. "State business relations and the dynamics of job flows in Egypt and Turkey," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 10(4), pages 519-558, December.
    3. Rahmanov, Ramiz & Qasimov, Asif & Tahirova, Gulzar, 2016. "The Labor Market in Azerbaijan," EconStor Preprints 142694, ZBW - Leibniz Information Centre for Economics.
    4. Saima Bashir & Tesfa Gebremedhin, 2011. "An Analysis Of The Relationship Between New Firm Formation And Economic Development In The Northeast Region Of The United States," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 16(03), pages 289-306.
    5. Emmanuel Mensah & Solomon Owusu & Neil Foster-McGregor & Adam Szirmai, 2023. "Structural Change, Productivity Growth and Labour Market Turbulence in Sub-Saharan Africa," Journal of African Economies, Centre for the Study of African Economies, vol. 32(3), pages 175-208.
    6. Saima Bashir & Tesfa Gebremedhin, 2011. "An Analysis of the Relationship Between New Firm Formation and Economic Development in the Northeast Region of the United States," Working Papers Working Paper 2011-02, Regional Research Institute, West Virginia University.
    7. Masso, Jaan & Eamets, Raul & Philips, Kaia, 2004. "Creative Destruction and Transition: The Effects of Firm Entry and Exit on Productivity Growth in Estonia," IZA Discussion Papers 1243, Institute of Labor Economics (IZA).
    8. Mensah, Emmanuel & Owusu, Solomon & Foster-McGregor, Neil & Szirmai, Adam, 2018. "Structural change, productivity growth and labour market turbulence in Africa," MERIT Working Papers 2018-025, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    9. repec:rri:wpaper:201102 is not listed on IDEAS
    10. Jacek Socha, 2006. "Tworzenie i likwidacja miejsc pracy w sektorze przedsiębiorstw w Polsce," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 5-6, pages 1-20.

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    More about this item

    Keywords

    job creation; job destruction; labour reallocation; Estonia;
    All these keywords.

    JEL classification:

    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers
    • P2 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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