Worker Flows and Labour Market Adjustment during the Great Recession: Evidence from a Large Shock

Hartmut Lehmann (), Tiziano Razzolini () and Anzelika Zaiceva

No 9588, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper analyzes how the labor market adjusts to the Great Recession. To this aim, we use the data for Latvia, a country that has experienced one of the most severe recessions in Europe and a subsequent remarkable recovery. Employing longitudinal EU SILC data and a panel data set constructed by us from various waves of the Latvian Labour Force Survey (LLFS), we estimate worker transitions between labor market states. Labor market adjustment takes place predominantly at the extensive margin since it is driven by flows from permanent wage employment to unemployment. We also show that older, non-Latvian and above all less skilled workers are especially hard hit by the economic crisis. Estimated transitions between four mutually exclusive occupational groups demonstrate that downward mobility is very limited even during the Great Recession. Finally, wage regressions suggest that job mobility is not associated with increased labour productivity during and immediately after the crisis.

Keywords: Great Recession; job and occupational mobility; labour market transitions; Latvia (search for similar items in EconPapers)
JEL-codes: J21 J6 P20 P23 (search for similar items in EconPapers)
Pages: 55 pages
Date: 2015-12
New Economics Papers: this item is included in nep-lma
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Citations: View citations in EconPapers (2)

Published - thoroughly revised version published as 'The Great Recession and Labor Market Adjustment: Evidence from Latvia' in: Comparative Economic Studies, 2020, 62 (1), 149 - 181.

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Related works:
Working Paper: Worker Flows and Labour Market Adjustment during the Great Recession: Evidence from a Large Shock (2016)
Working Paper: Worker flows and Labour Market Adjustment during the Great Recession:Evidence from a Large Shock (2016)
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