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

55 Pages Posted: 11 Jan 2016

See all articles by Hartmut Lehmann

Hartmut Lehmann

University of Bologna - School of Economics, Management, and Statistics; IZA Institute of Labor Economics

Tiziano Razzolini

University of Siena

Anzelika Zaiceva

University of Modena and Reggio Emilia; IZA Institute of Labor Economics

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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: labour market transitions, job and occupational mobility, Great Recession, Latvia

JEL Classification: J6, J21, P20, P23

Suggested Citation

Lehmann, Hartmut F. and Razzolini, Tiziano and Zaiceva, Anzelika, Worker Flows and Labour Market Adjustment During the Great Recession: Evidence from a Large Shock. IZA Discussion Paper No. 9588. Available at SSRN: https://ssrn.com/abstract=2712988

Hartmut F. Lehmann (Contact Author)

University of Bologna - School of Economics, Management, and Statistics ( email )

Piazza Scaravilli 1
40126 Bologna, fc 47100
Italy

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Tiziano Razzolini

University of Siena ( email )

Via Banchi di Sotto, 55
Siena, 53100
Italy
+393493277244 (Phone)

Anzelika Zaiceva

University of Modena and Reggio Emilia ( email )

Viale A. Allegri 9
Modena, Modena 42121
Italy

IZA Institute of Labor Economics ( email )

Schaumburg-Lippe-Str. 7 / 9
Bonn, D-53072
Germany

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