How Parallel Markets Fueled Chronic Shortage in the Soviet Official Sector

1999

The paper presents a disequilibrium model of a pre-transition centrally planned economy, with explicit description of labour supply to the official sector, as well as illegal economic activities. Under weak assumptions, raising official prices for deficit goods leads to even higher inflation in the shadow sector and increases the labour supply to the official sector. However, aggregate supply does not grow as much as income, and (flow) excess demand in the official sector goes up, while excess demand in the aggregate market remains positive. Simulation results suggest that our assumptions and conclusions are consistent with estimates of monetary overhang obtained (in a different way) by oth…

Access to Secondary Education in Albania: Incentives, Obstacles, and Policy Spillovers

2006

When judged either by educational attainment of adult population or by secondary and tertiary enrollment rates, by 2002 Albania compared very unfavorably to most European countries, including its neighbors. This study examines the determinants of secondary enrollment applying unobserved family effect probit model to data from Living Standards Measurement Survey 2002- 2003. The focus of the paper is to investigate the importance of access to school and to further education for enrollment. We find that both absence of a secondary school in the community and the distance from the residence location to a secondary school have strong negative effect on enrollment, controlling for family backgrou…

Coping with Growth and Emigration: Latvian Labor Market Before and After EU Accession

2007

In 2002-2005, Latvian labor market has witnessed dramatic changes related both to unprecedented economic growth and to a massive outflow of labor force after EU enlargement in May 2004. This study, based on micro-level analysis of Latvian Labor Force surveys 2002-2005, provides a detailed analysis of these changes, with a particular focus on developments which are likely to improve living standards of formerly disadvantaged segments of population. The findings suggest that emerging shortage of labor has led to strong wage growth and reduction of unemployment. The author documents increased employment rates and improvements in labor market position of ethnic minorities, elderly, fixed-term w…

The Post-Enlargement Migration Experience in the Baltic Labor Markets

2009

In this chapter, we use Lithuanian, Latvian and Estonian LFS data (2002-2007) complemented with several other surveys to compare the profile of Baltic temporary workers abroad before and after EU accession with that of stayers and return migrants. Determinants of migration and return, as well as selection issues are discussed. Post-enlargement migrants from all three countries were significantly less educated than stayers. Other things equal, medium-educated workers were most likely to move after accession, and human capital became increasingly less pro-migration over time. Return migrants differ from all movers in many ways and, in particular, are more educated. Although brain drain was no…

Does Commuting Reduce Wage Disparities?

2004

ABSTRACT  This paper shows that in the Baltic countries, commuting reduces urban-rural wage and employment disparities and increases national output. To quantify the effect of commuting on wage differentials, two sets of earnings functions are estimated (based on Estonian, Latvian, and Lithuanian Labor Force Surveys) with location variables (capital city, rural, etc.) measured at the workplace and at the place of residence. We find that the ceteris paribus wage gap between capital city and rural areas, as well as between capital and other cities is significantly narrowed by commuting in some cases but remains almost unchanged in others. Different outcomes are explained by country-specific s…

What Explains Prevalence of Informal Employment in European Countries: The Role of Labor Institutions, Governance, Immigrants, and Growth

2011

This paper looks into institutional and other macro determinants of prevalence of informal dependent employment, as well as informal self-employment, in European countries, using European Social Survey data on work without legal contract in on 30 countries, covering years 2004-2009. Consistently with theoretical predictions, quality of business environment has a significant negative impact on prevalence of both types of informal employment. The share of non-contracted employees is negatively affected by perceived quality of public services and positively related to economic growth. Informal self-employment is positively related to growth in Europe at large, as well as in Eastern and Souther…

Workers' Valuation of the Remaining Employment Contract Duration

2007

This paper introduces and applies a method for estimating workers' marginal willingness to pay for job attributes employing data on job search activity. Worker's willingness to pay for the remaining duration of the employment contract is derived. We provide evidence that workers attach substantial value to the remaining contract duration. A temporary worker with a remaining contract of 6 months is willing to pay about 10% of the wage to increase the contract by one month.

Migration Experience of the Baltic Countries in the Context of Economic Crisis

2016

The Baltic countries, which experienced intensive outflow of labor during the first 5 years after joining the EU, also provide an interesting case for a study of the migration response to economic shocks. The behavior of Baltic migrants was different from that of their counterparts from other NMS. During the economic crisis of 2009–2010 and its aftermath, mobile citizens of other countries which joined EU in 2004 responded primarily to the worsening economic situation in old member state host countries: emigration slowed down, while return migration intensified.

The workers' value of the remaining employment contract duration

2005

We introduce and apply a method for estimating workers' marginal willingness to pay for job attributes employing data on job search activity. Worker's willingness to pay for the remaining duration of the employment contract is derived. We provide evidence that workers attach substantial value to the remaining contract duration. A temporary worker with a remaining contract of six months is willing to pay about 10% of the monthly wage to increase the contract by one month.This discussion paper has resulted in a publication in Economica, 2008, 75(297), 116-39.

Potential Emigration of Latvian Labour Force After Joining the EU and its Impact on Latvian Labour Market

2003

This paper uses empirical evidence from several sources to shed light on patterns of mobility of Latvian labour force during the transition period as well as in the years to come. Updated inter-regional migration rates show that Latvian population is relatively mobile compared to some other European nations. Other things equal, during the transition period people were more likely to leave districts with low wage levels and to enter the ones where earnings are higher, despite many countervailing factors; outflow rates tended to be larger from high unemployment regions. Analysis of individual migration decisions made in 1989-1999 and migration plans for 1999-2002 confirms significance of econ…

Emigration from Latvia: A Brief History and Driving Forces in the Twenty-First Century

2019

AbstractIn recent years, Latvia has established itself as one of the top two countries with the most intensive emigration among EU/EFTA member states. This chapter starts by describing the demographic context and the scale of emigration post-2000, followed by a brief history of the main population flows (migration, refugees and deportation) from and to Latvia in the twentieth century. It then offers a more detailed analysis of emigration during the first 15 years of the twenty-first century including a closer look at the four waves of recent emigration: (i) the pre-EU accession wave, 2000–2003; (ii) the post-accession wave, 2004–2008; (iii) the crisis-driven wave, 2009–2010; and (iv) the po…

Determinants of inter-regional migration in the Baltic countries

2003

We show that Estonia, Latvia and Lithuania despite small geographical size feature considerable and persistent regional disparities. Registered migration rates have declined dramatically since the last years of Soviet era, yet they are high by international standards. Evidence from regional inflows and outflows in Latvia and from Estonian labour force survey is used to show that regional unemployment and especially wage differentials, as well as demographic factors, have a significant impact both on gross and net migration flows. Age and education effects are consistent with predictions of the human capital model of migration. Unemployed persons, as well as commuters between regions, are si…

Post-Enlargement Return Migrants' Earnings Premium: Evidence from Latvia

2008

The paper exploits a recent survey of over ten thousand economically active residents of Latvia; about 5% of respondents have worked abroad over the last three years, while 12% have family members with such experience. Post-enlargement labor migration from Latvia has been predominantly low-skilled, yet return migrants when compared to stayers are, on average, more educated and less likely to work as unskilled manuals. We combine instrumental variable and propensity score matching methods to study the effect of foreign experience on earnings. Results suggest that return migrants are neither positively nor negatively selected in terms of earnings. However, after controlling for worker demogra…

EU Referenda in the Baltics: Understanding the Results at the Regional Level

2005

This paper analyses regional differences in EU referenda results in Estonia, Latvia, and Lithuania. In each of the three countries, other things being equal, high income regions were significantly more pro-European than low-income ones, while regions with a high share of ethnic minorities were significantly more opposed to the enlargement than other regions. The ethnic effect was strongest in Latvia and weakest in Estonia. These findings clearly indicate necessity of stronger efforts both in integration of the Baltic societies and in the promotion of reliable EU information, especially in less developed regions. On the other hand, we confirm the findings from earlier referenda that support …

Does Commuting Reduce Wage Disparities?

2004

This paper shows that in the Baltic countries, commuting reduces urban-rural wage and employment disparities and increases national output. To quantify the effect of commuting on wage differentials, two sets of earnings functions are estimated (based on Estonian, Latvian, and Lithuanian Labor Force Surveys) with location variables (capital city, rural, etc.) measured at the workplace and at the place of residence. We find that the ceteris paribus wage gap between capital city and rural areas, as well as between capital and other cities is significantly narrowed by commuting in some cases but remains almost unchanged in other. Different outcomes are explained by country-specific spatial patt…

Returns to Education in the Baltic Countries

2003

Labour Force Survey (2000) data are used to estimate returns to education in Estonia, Latvia and Lithuania. Results are compared with evidence from other countries. We also discuss gender, ethnic, and urban-rural gaps in payoff to education.

Unemployment and the Earnings Structure in Latvia

2005

Latvia has recorded sustained GDP and productivity growth since 1997. Yet unemployment rates, despite gradual decrease, have remained high. The paper explores the mysteries of unemployment in Latvia. It analyzes labor flows between employment, unemployment, and nonparticipation and finds the following results: The type of education and the region of residence appear to be the most important determinants of success in finding jobs by the unemployed. The unemployed from ethnic minorities have lower chances to find a job within a year, other things equal, while the difference between genders is not significant. However, neither ethnicity nor gender seems to matter as far as the transition from…

The Workers' Value of the Remaining Employment Contract Duration

2005

This paper introduces and applies a method for estimating workers' marginal willingness to pay for job attributes employing data on job search activity. Workers' willingness to pay for the remaining duration of the employment contract is derived. We provide evidence that workers attach substantial value to the remaining contract duration. A temporary worker with a remaining contract of 6 months is willing to pay about 10% of the wage to increase the contract by one month.

Informal workers across Europe: Evidence from 30 European countries

2011

Emigration from Latvia: Recent trends and economic impact

2013

Tax incentives to encourage corporate investment in Latvia

2020

During 2006‐2017, Latvia has applied a rather generous accelerated depreciation (AD) policy to stimulate firm investment. The AD policy included: (1) the general AD scheme, (2) incentives to acquire new technological equipment, and (3) Investment incentives in the specially assisted areas. This paper analyses the effect of accelerated depreciation policy on firm investment using administrative firm‐level data for 2007–14. Lacking data for a natural experiment (AD began before our sample period), we use difference‐in-differences methodology with identification based on variation either across time (the crisis period serving as quasi‐counterfactual) or by firm size (with large firms unlikely …