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The Incidence and Cost of Job Loss in a Transition Economy: Displaced Workers in Estonia, 1989-1999

Author

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  • Hartmut Lehmann
  • Kaia Phillips
  • Jonathan Wadsworth
Abstract
We examine the pattern and costs of worker displacement in one of the more reform- oriented transition countries, Estonia, as the transition process develops. Using Labour Force Survey data covering the period 1989-1999, we show that after the initial shock, displacement rates in Estonia have fallen back to levels observed in several western economies, as the economy picks up. The incidence of displacement is also similar to that in the West - concentrated on the less skilled and those with short job tenure. Roughly half of those displaced find re-employment within two months while the other half lingers on in the state of non-employment. There is less evidence however of a wage penalty to job loss, unlike in some Western countries, a fact one might attribute more to the nature of the transition process than to wage setting institutions in Estonia. The main cost of displacement is then the income loss due to non-employment, which is severe for a minority of workers who experience long-term non-employment.

Suggested Citation

  • Hartmut Lehmann & Kaia Phillips & Jonathan Wadsworth, 2002. "The Incidence and Cost of Job Loss in a Transition Economy: Displaced Workers in Estonia, 1989-1999," CERT Discussion Papers 0209, Centre for Economic Reform and Transformation, Heriot Watt University.
    • Handle: RePEc:hwe:certdp:0209
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    Cited by:

    1. Yuhao Ge & Hartmut Lehmann, 2013. "The costs of worker displacement in urban labor markets of China," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 2(1), pages 1-23, December.
    2. Jaanika Meriküll & Pille Mõtsmees, 2017. "Do you get what you ask? The gender gap in desired and realised wages," International Journal of Manpower, Emerald Group Publishing Limited, vol. 38(6), pages 893-908, September.
    3. Ana Lamo & Julian Messina & Etienne Wasmer, 2006. "Are Specific Skills an Obstacle to Labor Market Adjustment? Theory and an Application to the EU Enlargement," Working Papers hal-03459097, HAL.
    4. Lehmann, Hartmut & Pignatti, Norberto & Wadsworth, Jonathan, 2006. "The incidence and cost of job loss in the Ukrainian labor market," Journal of Comparative Economics, Elsevier, vol. 34(2), pages 248-271, June.
    5. Atanas Christev & Olga Kupets & Hartmut Lehmann, 2008. "Trade Liberalisation and Employment Effects in Ukraine," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 50(2), pages 318-340, June.
    6. Lehmann, Hartmut & Muravyev, Alexander & Razzolini, Tiziano & Zaiceva, Anzelika, 2010. "The Costs of Job Loss in Russia," IZA Discussion Papers 5415, Institute of Labor Economics (IZA).
    7. Kerly Krillo & Jaan Masso, 2010. "The Part-Time/Full-Time Wage Gap in Central and Eastern Europe: the Case of Estonia," Research in Economics and Business: Central and Eastern Europe, Tallinn School of Economics and Business Administration, Tallinn University of Technology, vol. 2(1).
    8. Simona Ferraro & Jaanika Meriküll & Karsten Staehr, 2018. "Minimum wages and the wage distribution in Estonia," Applied Economics, Taylor & Francis Journals, vol. 50(49), pages 5253-5268, October.
    9. repec:bla:etrans:v:11:y:2003-06:i:2:p:291-320 is not listed on IDEAS
    10. Hartmut Lehmann, 2014. "Worker displacement in transition economies and in China," IZA World of Labor, Institute of Labor Economics (IZA), pages 1-20, May.
    11. Lehmann, Hartmut & Muravyev, Alexander & Razzolini, Tiziano & Zaiceva, Anzelika, 2013. "The wage and non-wage costs of displacement in boom times: Evidence from Russia," Journal of Comparative Economics, Elsevier, vol. 41(4), pages 1184-1201.
    12. 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).
    13. Bohacek, Radim & Myck, Michal, 2017. "Economic Consequences of Political Persecution," IZA Discussion Papers 11136, Institute of Labor Economics (IZA).
    14. H. Lehmann & A. Muravyev & T. Razzolini & A. Zaiceva, 2011. "The Wage and Non-wage Costs of Displacement: Evidence from Russia," Working Papers wp734, Dipartimento Scienze Economiche, Universita' di Bologna.
    15. Meriküll, Jaanika & Eamets, Raul & Humal, Katrin & Espenberg, Kerly, 2012. "Power without manpower: Forecasting labour demand for Estonian energy sector," Energy Policy, Elsevier, vol. 49(C), pages 740-750.
    16. Appelqvist, Jukka, 2007. "Wage and Earnings Losses of Displaced Workers in Finland," Discussion Papers 422, VATT Institute for Economic Research.
    17. Kosovka Ognjenovic & Aleksandra Brankovic, 2012. "Job Creation and Emplozment in a Time of Crisis," Book Chapters, in: João Sousa Andrade & Marta C. N. Simões & Ivan Stosic & Dejan Eric & Hasan Hanic (ed.), Managing Structural Changes - Trends and Requirements, edition 1, volume 1, chapter 20, pages 375-396, Institute of Economic Sciences.

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    More about this item

    Keywords

    displaced workers; labour markets in transition;

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
    • P50 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - General

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