Developments in the labour market and labour mobility:: The case of Estonia

In modern economic literature labour mobility is usually considered in the framework of labour market flexibility, which in turn is strongly related to the issues of structural imbalances in the labour market. The most significant concerns in the Estonian labour market are big regional (and centre-periphery) differences of participation and employment although the country is small by area. In addition, large-scale structural changes in the Estonian economy have resulted in mismatches between the skills of the labour force and job vacancies. The key word 'structural unemployment' is therefore the focus of labour market policy and probably will stay there for some time. When designing new policy measures, which allow for more flexible labour markets, it has to be kept in mind that only regionally balanced development can ensure sustainable welfare for the entire population. This paper analyses the extent of regional differences in the Estonian labour market and the potential of the different types of labour mobility in levelling the imbalances.