Unemployment and Structural Unemployment in the Baltics

ByChristian H Ebeke, Greetje Everaert

August 19, 2014

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

While the unemployment rate in the Baltics has fallen sharply from its crisis-peaks, it remains close to double digits. This paper estimates the structural component of the jobless rate in the three Baltic countries and analyzes its causes. Our main findings are that the current still elevated levels of unemployment mostly reflect structural factors. We then turn to why structural unemployment is so high. This paper points to skill mismatches, high tax wedges, and unemployment and inactivity traps as potential causes.

Subject: Labor, Labor markets, Labor taxes, Structural unemployment, Taxes, Unemployment, Unemployment rate

Keywords: Baltics, core CPI, crisis dummy, Estonia, internal migration, Labor markets, Labor taxes, Latvia, Lithuania, NAIRU estimate, NAIRU unemployment, Structural Unemployment, structural unemployment rate estimate, Unemployment, unemployment gap, Unemployment rate, WP

Pages:
25
Volume:
2014
DOI:
https://doi.org/10.5089/9781498317207.001
Issue:
153
Series:
Working Paper No. 2014/153
Stock No:
WPIEA2014153
ISBN:
9781498317207
ISSN:
1018-5941

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