Worker reallocation during Estonia's transition to market : how efficient and how equitable?

Based on consecutive labor force surveys, this study examines labor market dynamics during the first decade of the Estonian transition to market. the results show that, similar to other transition economies: 1) Estonias employment and labor force was reduced; 2) patterns of mobility profoundly changed--labor market flows intensified and previously nonexistent transiotions emerged; and 3) some groups of workers were disproportionally affected, chief among them the less educated and ethnic minorities. But Estonian liberal and radical transition reforms produced also labor market outcomes that differ signficantly from those in other transition economies--above all, the intensity of worker and job flows in Estonia's transition have surpassed those in most other transition economies., thereby contributing to efficient reallocation of labor. This was achieved by deliberate policies aimed at stimulating job creation and employment, above all by low employment protection and other policies geared toward increasing employability and strengthening the incentives of workers. Moreover, under the dynamic Estonian labor market adjustment, marginal groups have fared better than those in more protective labor markets of other transition economies.