Potential Emigration of Latvian Labour Force After Joining the EU and its Impact on Latvian Labour Market

New SSE Riga/BICEPS research paper by Mihails Hazans (BICEPS, University of Latvia).

Abstract. This paper uses empirical evidence from several sources to shed light on patterns of mobility of Latvian labour force during the transition period as well as in the years to come. Updated inter-regional migration rates show that Latvian population is relatively mobile compared to some other European nations. Other things equal, during the transition period people were more likely to leave districts with low wage levels and to enter the ones where earnings are higher, despite many countervailing factors; outflow rates tended to be larger from high unemployment regions. Analysis of individual migration decisions made in 1989-1999 and migration plans for 1999-2002 confirms significance of economic incentives for geographical mobility of Latvian population and reveals behaviour consistent with the human capital model: young and more educated individuals were more likely to move. On-line survey conducted in 2003 shows that a very high proportion of Internet users in Latvia consider possibility to work in one of the EU countries when these countries open their labour markets. According to the most conservative estimate, number of potential movers among Internet users is about 80 thousand, and only half of them are going to return to Latvia. Determinants of the intention to emigrate permanently are different from the factors affecting general propensity to “go west.” Other things equal, potential emigrants are significantly less likely to return if they prefer Russian (rather than Latvian) language website, have higher education, are young, and live in the capital. We also identify occupations which are likely to experience the largest labour outflows in the short run and in the long run.

Keywords: Migration, Regional Disparities, Human Capital, EU enlargement

JEL Categories: F22, J61, J31, J15, P52, R23, C81