Rapid labor reallocation with a stagnant unemployment pool: the puzzle of the labor market in Lithuania

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Collection:
Mokslo publikacijos / Scientific publications
Document Type:
Knygos / Books
Language:
Anglų kalba / English
Title:
Rapid labor reallocation with a stagnant unemployment pool: the puzzle of the labor market in Lithuania
Authors:
Rutkowski, Jan
Publication Data:
Washington, D.C. : World Bank, 2003.
Pages:
82 p
Series:
Policy research working papers; 2946
Contents:
Introduction — I. The Concept of Labor Market Flexibility — II. Macroeconomic Perspective: Restructuring with Underutilization of Labor Resources: Key Trends and Outcomes; Job Creation and Job Destruction; High Job Turnover; Persistence of High Job Reallocation; The Pattern of Job Turnover; The Role of Employer Characteristics; Firm size; Wage level; Industry; Market concentration; Region; Determinants of Job Creation; Job Turnover and Unemployment — III. Worker Perspective: Long Job Search Duration: Labor Flows; The Skills Gap; Job Security; Earnings Inequality — IV. Employer Perspective: Constraints to Employment and Wage Adjustments : Constraints To Employment Adjustment; Constraints To Wage Adjustment; Are the Constraints Binding?; Policy Recommendations — V. Summary and Conclusions: Main Issues; Macroeconomic Perspective; Worker Perspective; Employer Perspective; Policy Implications — References — Annex 1 Description of the Survey of Employment and Wages — Annex 2 Indicators of Employment Protection in Lithuania and Selected Transition Economies (as of 2001).
Subject Category:
LT
Užimtumas / Employment; Darbo rinka / Labour market; Darbo apmokėjimas / Remuneration of work.
Summary / Abstract:

ENLithuania is a transition economy undergoing rapid enterprise restructuring associated with substantial job turnover. At the same time, unemployment in Lithuania is high and of long duration. This presents a puzzle: high job turnover epitomizes labor market flexibility, while high unemployment indicates labor market rigidities. What are the reasons behind this paradox? Why do the unemployed not benefit from job opportunities created by high job turnover, which entails high rates of job creation and hiring? To answer this question, the author looks at three perspectives on labor market flexibility: 1) The macroeconomic perspective-A flexible labor market is one that facilitates full use and efficient allocation of labor resources. 2) The worker perspective-A flexible labor market means ease in finding a job paying a wage adequate to the worker's effort and skills. 3) The employer perspective-A flexible labor market does not unduly constrain the employer's ability to adjust employment and wages to changing market conditions. The author looks at all three dimensions of labor market flexibility by analyzing job reallocation, worker transitions across labor force states, wage distribution, and regulatory constraints faced by employers.He focuses on the issue of job creation and job destruction, using micro level data on all registered firms. He finds that flexibility in one dimension can concur with rigidities in the other. Specifically, employers in Lithuania have a substantial degree of flexibility with employment adjustment coupled with limited flexibility to wage adjustment due to a high statutory minimum wage. The relatively rigid wage structure locks low productivity workers who are preponderant among the unemployed. The low-skilled long-term unemployed have become marginalized and unable to successfully compete for available jobs, while the high job turnover is accounted for largely by job-to-job transitions. As a result, a dynamic labor market coincides with a stagnant unemployment pool.

Subject:
Ekonomika / Economics
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https://www.lituanistika.lt/content/114323
Updated:
2026-02-25 13:43:03
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