Mihails Hazans

Determinants of inter-regional migration in the Baltic countries

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 significantly more likely to become migrants in Estonia. Keywords: Migration, Regional Disparities, Regional Labour Markets.

Informal workers across Europe : evidence from 30 European countries

The European Social Survey data are used to analyze informal employment in 30 countries, focusing on employees without contracts and on informal self-employed workers (who are distinguished from formal workers). Overall the size of informal employment decreases from South to West to East to North. However, working without a contract is more prevalent in Eastern Europe than in the West, except for Ireland, the United Kingdom, and Austria. Between 2004 and 2009, no cases were found when unemployment and dependent informality rates in a country went up together, suggesting that working without a contract is pro-cyclical in Europe. The dependent informality rate is inversely related to skills (measured by either schooling or occupation). Both in Southern and in Western Europe, the highest dependent informality rate is found among immigrants from Central and Eastern Europe and the Former Soviet Union, while in Eastern Europe this group is second after minorities without immigrant background. In the Southern and part of Western Europe, immigrants not covered by European Union free mobility provisions are much more likely to work without a contract than otherwise similar natives. The paper provides evidence that exclusion and discrimination plays an important role in pushing employees into informality, while this seems not to be the case for informal self-employed workers. Both on average and after controlling for a rich set of individual characteristics, informal employees in all parts of Europe are having the largest financial difficulties among all categories of the employed population (yet they fare much better than the unemployed and discouraged), while informal self-employed workers are at least as well off as formal employees. Finally, there is a negative and significant effect of individual-level satisfaction with the national government on the propensity to work without a contract in Eastern Europe, as well as in Western Europe.

Unemployment and the earnings structure in Latvia

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 employment to unemployment is concerned. Regional disparities in job destruction seem to be less sizable than disparities in job creation. The analysis of job search methods by the unemployed indicates that two target groups of state employment policy (young unemployed and long-term unemployed) appear to make relatively little use of the public employment service. The author also looks at the impact of education, age, gender, ethnicity, and regional factors on individual earnings. The relative position of youth and women in Latvian labor market, compared with prime age men, is less unfavorable than in many other countries. Yet the gender wage gap has increased recently, and the same is true for regional disparities. Beneficiaries of the so-called new education system have a relatively high market value, especially with graduates from universities and general secondary schools. Finally, returns to experience seem to be nonexistent for many adult workers without higher education.

A Stock-Flow Matching Approach to Evaluation of Public Training Programme in a High Unemployment Environment

Monthly panel (1998-2003) data from regional labour offices in Latvia are used to analyse the matching process in a high unemployment-low labour demand environment and to evaluate the impact of active labour market policy programmes on outflows from unemployment. Results suggest that the hiring process is driven by a stock-flow rather than by a traditional matching function: the stock of unemployed at the beginning of the month and flow of vacancies arriving during the month are the key determinants of outflows from unemployment to employment, whereas stock of vacancies and inflow of unemployed do not play any significant role. We find positive and significant effect of training programmes on outflows from unemployment to employment, thus providing strong evidence against cuts in training expenditures. Copyright 2007 The Authors; Journal compilation 2007 CEIS, Fondazione Giacomo Brodolini and Blackwell Publishing Ltd..

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

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 Southern Europe. The level of GDP per capita also has a positive impact on the prevalence of informal employment in Europe at large and within Eastern and Southern Europe, whilst an opposite effect is found in Western and Northern Europe. Other things equal, the share of non-contracted employees in the labor force across European countries increases with the minimum-to-average wage ratio, with union density, with the share of first and second generation immigrants, and with income inequality, but falls with stricter employment protection legislation (EPL) and higher tax wedge on labor. Thus it appears that in Europe at large, labor cost effects of EPL and taxes are weaker than their impact via perceptions of job security and law enforcement, along with tax morale and the income effect. Yet the EPL effect on informality is positive (i.e., cost-related) when either Eastern and Southern Europe or Western and Northern Europe are considered separately. Furthermore, within Western and Northern Europe, the minimum wage effect is negative, whilst within Eastern and Southern Europe, the union effect is negative; in both cases, we offer a supply side explanation.

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

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 workers, the low-skilled, and other disadvantaged groups. Wage growth, in turn, has fostered labor force participation, resulting in further increase of employment rates. This analysis may be of interest for policy makers in countries entering a period of transformation or exposed to external shocks. The study also provides an in-depth analysis of the labor market integration of the sizable Russian-speaking minority in Latvia. The author finds, on average, modest occupational segregation but somewhat larger segregation as far as the sectors of the economy are concerned. In both cases, segregation index is inversely related to Latvian language skills; the same is true for the observed ethnic wage gap. The unexplained ethnic wage gap reaches its maximum (6 percent) for workers with medium Latvian language skills.

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

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 background. In order to alleviate potential endogeneity bias of distance and community characteristics effects, we control for migration history of individuals since 1990. In rural areas, enrollment is impeded also by absence of a pre-school in the community, and by higher transportation cost from the community to its “main” secondary school. Proximity to a university city (as opposed to other urban centers) substantially increases likelihood of secondary enrollment in rural areas. In urban areas, a similar effect has emerged in 2003, plausibly as a response to opening the market for private universities. The above findings suggest that developing tertiary education and child-care system may have positive spillover effects on secondary enrollment.

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

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 economic incentives for geographical mobility of Latvian population and reveals behaviour consistent with the human capital model: young and more educated individuals were more likely to move. On-line survey conducted in 2003 shows that a very high proportion of Internet users in Latvia consider possibility to work in one of the EU countries when these countries open their labour markets. According to the most conservative estimate, number of potential movers among Internet users is about 80 thousand, and only half of them are going to return to Latvia. Determinants of the intention to emigrate permanently are different from the factors affecting general propensity to “go west.” Other things equal, potential emigrants are significantly less likely to return if they prefer Russian (rather than Latvian) language website, have higher education, are young, and live in the capital. We also identify occupations which are likely to experience the largest labour outflows in the short run and in the long run.

Returns to Education in the Baltic Countries

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.

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

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.