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Is there a labour market mismatch in Estonia? Measuring regional, occupational and industrial labour market mismatch

Author

Listed:
  • Simona Ferraro

    (Department of Economics and Finance, Tallinn University of Technology, Tallinn, Estonia)

  • Pauline Kommer

    (Statistics Estonia, Tallinn University, Tallinn, Estonia)

Abstract

Despite the fast growth in the Estonian economy, unemployment has remained high for extended periods of time. This paper analyses and quantifies the mismatch between registered unemployment and vacancies and how it has contributed to unemployment in the Estonian labour market at the (county) regional, occupational, and industrial levels for the time span 2011-2021. We apply the search and matching theory and the mismatch index framework, and our findings show that around 4–5 per cent of potential hires have been lost in the Estonian labour market because of mismatch. The contribution of mismatch to the level of unemployment is roughly 5–8 per cent, meaning that if the match between unemployed individuals and vacancies was efficient, unemployment would have been 5–8 per cent lower. Mismatch has the smallest impact at the regional level and the largest at the industrial level.

Suggested Citation

  • Simona Ferraro & Pauline Kommer, 2023. "Is there a labour market mismatch in Estonia? Measuring regional, occupational and industrial labour market mismatch," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 23(2), pages 200-228.
    • Handle: RePEc:bic:journl:v:23:y:2023:i:2:p:200-228
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    File URL: https://www.tandfonline.com/doi/epdf/10.1080/1406099X.2023.2275865
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    More about this item

    Keywords

    Search and matching theory; unemployment; vacancies; mismatch index;
    All these keywords.

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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