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The optimality and overuse of labour in Estonian manufacturing enterprises
University of Tartu, Fac. of Econ. and Bus. Admin, Institute of Economics, 51009 Tartu, Estonia.
MTT Economic Research, Institute for the Study of Labor, Techno-Econ./Plcy. Prog. Coll. Eng., Finland.ORCID iD: 0000-0002-7902-4683
2004 (English)In: The Economics of Transition, ISSN 0967-0750, E-ISSN 1468-0351, Vol. 12, no 4, p. 683-720Article in journal (Refereed) Published
Abstract [en]

Transition economies need labour market flexibility for successful restructuring and reallocation of the labour force, and for coping with the requirements of the European Monetary Union. In this paper we apply a novel approach to the issue of labour market flexibility in transition countries by studying the optimality and efficiency of labour usage in Estonian manufacturing enterprises. We employ a dynamic model in which both the long-run optimal level of employment and the speed at which actual employment is adjusted to the optimal are modelled as functions of several variables. Firm-level panel data of 1995-99 were used. The results showed that in the long run, employment responds most strongly to wages, followed by value added and capital stock. The speed of adjustment, labour use optimality and efficiency all show much greater variations over firms than over time. In the course of time, both labour-saving technical change and an increase in the efficiency of labour usage occur. On average, there is shortage of labour compared to firms’ own optimal level, along with overuse of labour compared to best-practice technology. Capital seems to be a binding constraint on the development of employment in the Estonian labour market. ©The European Bank for Reconstruction and Development, 2004.

Place, publisher, year, edition, pages
2004. Vol. 12, no 4, p. 683-720
Keywords [en]
labor market; labor supply; manufacturing; transitional economy, Baltic States; Eastern Hemisphere; Estonia; Eurasia; Europe; Northern Europe; World
National Category
Economics
Identifiers
URN: urn:nbn:se:hj:diva-24492DOI: 10.1111/j.0967-0750.2004.00199.xScopus ID: 2-s2.0-10244229634OAI: oai:DiVA.org:hj-24492DiVA, id: diva2:742837
Available from: 2014-09-02 Created: 2014-09-01 Last updated: 2017-12-05Bibliographically approved

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Heshmati, Almas

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  • apa
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