engleski

Youth unemployment in Croatia: Who is more exposed to the risk of unemployment at a young age?

The problem of youth unemployment has received a lot of attention within the EU recently, especially in the ‘Europe south’, with Greece, Spain, and Croatia as the most prominent examples. Despite the policy and social importance of the issue, studies examining empirically the individual, household and area factors contributing to non-participation of youths in the labour market are rather limited. This especially applies to Croatia, where high and increasing youth unemployment has received a lot of attention from both the public and the policy makers ; however, academic contribution is still missing. This paper addresses the issue of the youth unemployment in Croatia, taking into account country specificities and developments both prior and during the crisis. In this respect, the individual Labour Force Survey (LFS) microdata on the sample of 15-29-year olds over the period 2007-2014 are used. Probit model is applied in order to estimate the contribution of different characteristics to the individual risk of unemployment over the observed period. In this way, the probability of observing a specific unemployment outcome, with respect to the employed, is estimated for each individual on the basis of a series of individual and household characteristics. In order to address the problem of non-random selection of young people into activity, in the first step probit models are corrected using the Heckman correction for selection. The obtained results suggest that selection into labour force based on observables is important, i.e., individuals significantly self-select into the labour force, although the value of coefficients does not change much after the correction for selection. Probit estimations propose that ‘older’ cohorts of youth population (20-24 and 25-29-year olds) have lower probability of being unemployed as opposed to the youngest cohort (15-19). The same is true for females in comparison to their male counterparts, although this is less obvious in recent years. Married individuals are less likely to be unemployed, whereas those foreign-born are (insignificantly) more exposed to the risk of being unemployed. More education, as expected, decreases the probability of being unemployed. Household size increased the probability of unemployment for Croatian youths before the crisis, after which it becomes insignificant, while as of 2012 higher number of household members seems to decrease probability of unemployment for youths. Urban area of residence increases the risk of unemployment for youths in Croatia, as is living in Central and Eastern or Adriatic Croatia as opposed to Northwest Croatia.

youth unemployment; unemployment risk; crisis; probit; selection; Croatia

The paper is part of the project ZAMAH - The Impact of the Recession on the Structure and Flow of Youth Unemployment in Croatia (HR.3.2.01-0136) that has been funded with support from the European Social Fund (ESF).