engleski

Working for 200 euro? The unintended effects of traineeship reform on youth labor market outcomes

This paper evaluates the effects of an active labor market policy (ALMP) reform, the so- called SOR measure (vocational training for work without commencing employment), on youth labor market outcomes in the newest EU member state—Croatia. In 2012, SOR was redesigned to ease the first labor market entry and promote on-the-job training, enabling a young person without relevant work experience to get a one- year contract and a net monthly remuneration of 210 euro, while after 2014 the measure also became a part of the European Youth Guarantee. Pooling Croatian Labor Force Surveys from 2007 to 2016 and using the difference-in-difference strategy, we estimate the causal intent-to- treat effect of the program reform on labor market outcomes. The main results indicate that the reform has had, at best, neutral effects on employment and unemployment, while there is evidence that a portion of young individuals was propelled into inactivity. Though expected, adverse effect on wages—both at the mean and higher percentiles of the wage distribution—is driven mostly by wages received by women and university graduates.

ALMP ; evaluation ; labor market outcomes ; traineeship reform ; youth unemployment

This research has been supported by Tvoj Grant@EIZ and partially by ZAMAH (HR.3.2.01‐ 0136). We thank Valerija Botrić, Ozana Nadoveza, Danijel Nestić, Ivica Rubil, Stjepan Srhoj, Marina Tkalec, as well as participants at the 7th Ifo Dresden Workshop on Labour Economics and Social Policy in Dresden, 10th Workshop on Labour Economics in Trier, 1st EIZ workshop in Zagreb, 32nd Annual Conference of the European Society for Population Economics in Antwerp and Work, Employment and Society Conference 2018 in Belfast for helpful discussions and valuable comments. All remaining errors are our own.