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Looking for the Workforce: the Elderly, Discouraged Workers, Minorities, and Students in the Baltic Labour Markets

  • Mihails Hazans

    (University of Latvia & BICEPS)

This paper looks at the evolution of the labour markets in Estonia, Latvia, and Lithuania since the beginning of transition (in some respects since 1996/1998) until 2003, with a particular focus on labour force participation. How did labour supply in the Baltic countries respond to changes in minimum wages, unemployment benefits and retirement regulation? Do the marked differences in labour market policies between the countries result in different patterns of participation? What are the obstacles to and driving forces of participation? We find that relative contribution of participation and demographic trends to the dynamics of the labour force varied substantially both over the years and across the three countries. Participation, in turn, has been shaped by sometimes complicated interaction between educational choices, retirement, policy changes, and external shocks. Resulting differences in trends and patterns are quite substantial, indicating that there is a room for increasing participation in each of the countries. Recent rates of transition from unemployment to employment and to inactivity are similar to those found in EU-15. Panel data analysis of determinants of participation and discouragement suggests that increasing after-tax real minimum wage has significant positive effect on participation and reduces discouragement in Lithuania. In Estonia, by contrast, positive effect of minimum wage on participation is found only for teenagers of both genders and for young males. Ethnic minorities, especially females, in all three Baltic countries are less likely to be in the labour force, other things equal.

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File URL: http://128.118.178.162/eps/lab/papers/0507/0507008.pdf
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Paper provided by EconWPA in its series Labor and Demography with number 0507008.

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Length: 34 pages
Date of creation: 13 Jul 2005
Date of revision:
Handle: RePEc:wpa:wuwpla:0507008
Note: Type of Document - pdf; pages: 34
Contact details of provider: Web page: http://128.118.178.162

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  1. 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.
  2. Mihails Hazans, 2003. "Potential emigration of Latvian labour force after joining the EU and its impact on Latvian labour market," SSE Riga/BICEPS Research Papers 2003-2, Baltic International Centre for Economic Policy Studies (BICEPS) and Stockholm School of Economics in Riga (SSE Riga).
  3. Kertesi, Gabor & Köllő, János, 2003. "Fighting “Low Equilibria” by Doubling the Minimum Wage? Hungary’s Experiment," IZA Discussion Papers 970, Institute for the Study of Labor (IZA).
  4. Huber, Peter, 2006. "Regional labor market developments in transition," Policy Research Working Paper Series 3896, The World Bank.
  5. Kollo, J. & Fazekas, K., 1990. "Patterns of unemployment in hungary--a case study," Structural Change and Economic Dynamics, Elsevier, vol. 1(1), pages 103-118, June.
  6. Tito Boeri & Katherine Terrell, 2001. "Institutional Determinants of Labor Reallocation in Transition," William Davidson Institute Working Papers Series 384, William Davidson Institute at the University of Michigan.
  7. Charles Kroncke & Kenneth Smith, 1999. "The wage effects of ethnicity in Estonia," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 7(1), pages 179-199, March.
  8. Hazans, Mihails, 2003. "Determinants of inter-regional migration in the Baltic countries," ZEI Working Papers B 17-2003, ZEI - Center for European Integration Studies, University of Bonn.
  9. Rutkowski, Jan, 2003. "Rapid labor reallocation with a stagnant unemployment pool : the puzzle of the labor market in Lithuania," Policy Research Working Paper Series 2946, The World Bank.
  10. Hazans, Mihails, 2005. "Unemployment and the earnings structure in Latvia," Policy Research Working Paper Series 3504, The World Bank.
  11. Tito Boeri, 1999. "Transition with Labour Supply," William Davidson Institute Working Papers Series 274, William Davidson Institute at the University of Michigan.
  12. Haltiwanger, John C. & Vodopivec, Milan, 1999. "Gross worker and job flows in a transition economy : an analysis of Estonia," Policy Research Working Paper Series 2082, The World Bank.
  13. Svejnar, Jan, 1999. "Labor markets in the transitional Central and East European economies," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 42, pages 2809-2857 Elsevier.
  14. Catherine Saget, 1999. "The determinants of female labour supply in Hungary," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 7(3), pages 575-591, November.
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