Management Theory and Studies for Rural Business and Infrastructure Development, Volume 35, Number 1

Duration sensitive unemployment rate in the rural areas of Lithuania

Agnė Laužadytė

Abstract

The paper aims to estimate the loss to society (or ‘social loss’) resulting from the long term unemployment in the rural areas of Lithuania, i. e. to justify the need of application of preventative labour market policies to jobless individuals at early stages of their unemployment spell. The concept of duration-adjusted unemployment is introduced and “duration sensitive” unemployment rates based on different degrees of inequality aversion are estimated separately for men and women, based on methodology proposed by V. K. Borooah (2002). Analysis leads to conclusion that even with lowest degree of inequality aversion duration sensitive unemployment rate is considerably higher than the traditionally defined one – both for men and women, in the rural areas and countrywide, and during the whole period of research. The difference between the rates increases sharply with moderate and highest degrees of aversion, i. e. Lithuanian society faces a huge burden induced by long-term unemployment. Thus, preventative labour market policies are of greatest importance.

JEL code – J64.

Keyword(s): inequality aversion, social loss, unemployment duration, unemployment rate


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Management Theory and Studies for Rural Business and Infrastructure Development eISSN 2345-0355

This journal is published under the terms of the Creative Commons Attribution-Noncommercial 3.0 Unported License. Responsible editor: Dr Audrius Gargasas.