Creative destruction and transition: the effects of firm entry and exit on productivity growth in Estonia

This paper presents one of the first studies of firm demographics in Estonia, particularly, on the processes of firm entry and exit as well as survival analysis of new firms. Also decompositions of productivity change into components consisting of resource reallocation, firm entry and exit, and productivity growth within continuing firms is carried out. Our results, derived from a novel database of the population of Estonian firms, show that firm turnover has been rather high in Estonia during the observed period from 1995 to 2001, resulting from low institutional entry barriers and emergence of the SME sector. The high survival rates for new firms and surviving firms' relatively fast growth could reflect their relatively high productivity compared to incumbent firms and changes in the sectoral structure of the economy. The decomposition of productivity change shows that the high productivity growth has been mostly from within-firm productivity growth (e.g. the adoption of new production technologies and organizational changes), but the reallocation of production factors (especially the exit of low productivity units) has played an important role as well

Job creation and job destruction in Estonia: labour reallocation and structural changes

This paper documents and analyses gross job flows and their determinants in Estonia over the years 1995-2001, using a unique database from the Estonian Business Registry. This database contains all (including also micro and small firms) officially registered firms in Estonia, the total number being almost 52,000. There are several important findings in the paper. Our results show that job flows (job creation and job destruction rates) have been extremely high in Estonia and are comparable to the levels documented for the US. These rates have not decreased recently, although worker flows (transitions between labour market states) have dropped. We also found that the firm-specific component in job flows excess of employment change had relatively lower importance than in western studies due to the emergence of small and medium-sized enterprises and labour reallocation between the economic sectors. The high inter-sectoral mobility has helped maintain high levels of job flows, while both are high also due to a favourable institutional environment, especially due to low start-up costs and a large share of micro enterprises

Five characteristics of youth unemployment in Europe

Current levels of youth unemployment need to be understood in the context of increased labor market flexibility, an expansion of higher education, youth migration, and family legacies of long-term unemployment. Compared with previous recessions, European-wide policies and investments have significantly increased with attempts to support national policies. By mapping these developments and debates, we illustrate the different factors shaping the future of European labor markets. We argue that understanding youth unemployment requires a holistic approach that combines an analysis of changes in the economic sphere around labor market flexibility, skills attainment, and employer demand, as well as understanding the impact of family legacies affecting increasingly polarized trajectories for young people today. The success of EU policy initiatives and investments will be shaped by the ability of national actors to implement these effectively

Economic aspects of migration and the refugee crisis in Europe: challenges and opportunities in a dramatic scenario

The world is currently facing the largest humanitarian crisis since the Second World War. The growing number of people displaced by civil conflict or natural disasters has increased dramatically in the recent years and this is posing enormous challenges to host countries. However, to date economic impacts of refugees in host and sending countries are controversial and arguably understood. Therefore, the aim of this article is to analyse how the traditional economic approach of migration and labour can help to understand and manage the refugees’ situation, as well as their potential benefits for all the parties involved. The present research concludes that, in the long run, refugee migration may have positive outcomes for sending and host economies, and for themselves. However, it is also emphasized that carefully designed refugee policies are critical to meet that goal, mainly focusing on two aspects: identification and integration

Looking for the workforce: the elderly, discouraged workers, minorities, and students in the Baltic labour markets

Labour supply, Discouraged workers, Minimum wages, Ethnic minorities, J14, J15, J22, P52,