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Labour Market Liberalisation during the Recession: Legislative reform in Estonia
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Economics.
2013 (English)Independent thesis Advanced level (degree of Master (Two Years)), 20 credits / 30 HE creditsStudent thesis
Abstract [en]

The paper examines the short-term outcomes of the labour market legislation reform in Estonia in 2009. The intorduction of the new Employment Contracts Act was aimed to improve the labour market situation by affecting the vacancy rate through inducing greater flexibility in market relationships. The view on this type of reform in the literature is generally favourable: it is seen as a helpful measure to accelerate the recovery. However, the Employment Contracts Act was passed well ahead of the actual recovery period, when the economy was still in decay. As such, it became a pro-cyclical tool for internal devaluation rather than a measure to promote employment. This paper therefore seeks to analyse the direction and magnitude of the ECA´s impact on employment by examining several areas of economic activity. A negative effect could have had a further dampening effect on the economy due to particularly high risk of structural, long-term unemployment and lack of active labour market policies. This study finds strong evidence that in the quarters following the reform the relationship between the demand for labour and employment was subject to a negative change.

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URN: urn:nbn:se:uu:diva-203611OAI: oai:DiVA.org:uu-203611DiVA: diva2:637076
Available from: 2013-07-16 Created: 2013-07-16 Last updated: 2013-07-16Bibliographically approved

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