Description

Lithuania's unemployment rate has remained around 7 percent since 2018 despite strong growth and rising job vacancies. This paper identifies three structural factors: (i) skills mismatches, (ii) regional mobility constraints, and (iii) social benefit design features that may weaken work incentives for some households. Cross-country analysis suggests these factors materially raise equilibrium unemployment. If Lithuania moved closer to the best-performing EU countries on these structural dimensions, unemployment could fall by more than 2 percentage points. Priorities include stronger active labor market policies, better training, easier mobility, and better-targeted benefits.

More publications in this series: Selected Issues Papers