transition probabilities is small compared to the difference in unemployment rates between these regions. In Latgale unemployment was 18 percent during this time, while in the Riga and Zemgale regions it was 11 percent.

From the evidence, one may conclude that Latgale suffers primarily from a low rate of job creation and skills mismatch among the long-term unemployed, rather than from a high rate of job destruction. On the other hand, the predicted overall rate of exit from employment (both to unemployment and inactivity) is highest for Vidzeme. Combined with the relatively high proportion of recently discouraged workers there, these findings point towards emerging problems in the Vidzeme labor market. For a summary of districtspecific information on employment transitions, see Appendix Table 21.

**The rate of job destruction is significantly higher in cities** . About 4 percent of employed urban residents aged 20 to 54 transit from employment to unemployment within a year.  In the countryside this proportion is about 2 percent (see Appendix Figure 15). Because some individuals commute to work, differences would be smaller if measured by job location rather than residence. However, information on the location of an individual's job in 2001 is not available in the LFS 2002. Interestingly, there is no difference between urban and rural areas in terms of predicted rates of exit from the labor force.

**Labor force transitions by employment status and occupation.** Results displayed in Appendix Figure 16 suggest that the self-employed are significantly less likely to become unemployed or to leave the labor force than otherwise similar employees. Individuals in white collar occupations are also relatively unlikely to make transitions to unemployment or to non-participation, in comparison with semiskilled and unskilled manual workers and market and sales workers. Skilled manual workers are similar to other blue collar workers as regards the risk of becoming unemployed, but more similar to white collar workers as far as the probability of leaving the labor force is concerned.

**Inter-sectoral differences** . There are significant differences between sectors of the economy in terms of job destruction over the 2001-2002 period (see Appendix Figure 17 and Appendix Table 19 for estimation results). The highest rates of job destruction occur in hotels and restaurants, the manufacture of wood products, forestry, and fishing. The lowest rates of job destruction occur in public administration, education, and health care, followed by heavy industry, energy, manufacturing of paper products, printing and publishing.

**Previous labor market experience.** Finally, everything else equal, employed persons with less than one year of total experience, as well as those who have been registered as unemployed in the past, have significantly lower chances of finding a job within the year.   Individuals with less than one year of work experience are also more likely to leave the labor force.

# **D.  JOB SEARCH METHODS OF THE UNEMPLOYED**

This section explores patterns of job search by unemployed jobseekers. Use is made of several years of data from the Latvian LFS in order to characterize the activities engaged in by unemployed individuals to find new jobs. Information on the nature of job search is of key relevance in designing policies which aid those who have lost their jobs in finding new work.

**Main Job Search Techniques** Between 1996 and 2000, the LFS provided information only on the main action taken by unemployed individuals to find a job.  As can be seen from Figure 20, the proportion of those who indicate registration at SES (State Employment Service) as their main method of job search has been increasing from about one-quarter in1996 to more than one-third in 1999.Thereafter, use of this method started to decrease, but the SES remains the most popular method of job search.  Private employment services play a minor role in job search activities of the unemployed, especially amongst

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