Reservation wages in Estonia

This paper analyses the factors determining reservation wages in Estonia, and estimates the influence of the reservation wage on unemployment duration. According to estimations there is no statistically significant effect of unemployment benefit and social assistance on the reservation wage in Estonia. While evidence was found, that the higher the reservation wage, the lower the probability of finding a job, if all other things are equal. It was also found that the eligibility of unemployment benefit or social assistance increases the duration of the unemployment period, which indicates the lower offer arrival rate in the case of unemployed receiving assistance, which might be caused by a lower search intensity.reservation wage, unemployment duration, unemployment insurance, transition economy

Social and Political Dimensions of the Eurozone Enlargement in the case of the Baltic States

This Regional Input is a supplement to Ezoneplus Working Paper No. 13 on the Social Dimension of the Eastward Enlargement of the Eurozone. Political transition from authoritarian to democratic society has been extensive in all three Baltic States. The Baltic States are often examined together in political studies despite of the fact that there is much more variation among these countries in the political sphere than in the economic and social spheres. The problems stemming from the political sphere might be even more crucial for EU enlargement because of their relative instability and slow working comparing that to the economic and social concerns. Therefore this study emphasises some major political differences between the Baltic States that should be taken into account when analysing EU eastward enlargement processes. The paper aims to analyze social and political dimensions of eurozone enlargement in the Baltic States emphasizing also negative consequences of transition and integration processes and their possible impact on EU accession.Regional Input, Baltic States, social dimension, political dimension

The impact of minimum wage on the labour market in Estonia: an empirical analysis

In Estonia, as in several other EU acceding countries, minimum wage has been on an upward trend and in the coming years it will expectedly be raised faster than the average wage. Despite its rapid increase, the impact of the minimum wage on Estonian labour market has not been analysed. The current paper aims to fill this gap. We estimate the effect of the minimum wage on employment and wages in Estonia during the period of 1995-2000, using micro-data from Estonian Labour Force Surveys. The estimation results indicate that a minimum wage increase leads to employment reduction for the group of workers who are directly affected by this change, ie those whose wages have to be raised as a result. Additional negative effect of raising the minimum wage is that the rate of compliance with this regulation diminishes as a result, thereby enlarging the share of workers whose salaries remain below the legally set minimum.