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Youth unemployment and non-participation: between ‘opting’ for education and ‘coping’ with labour market exclusion - evidence from Croatia

This paper examines both the dynamics and circumstances that push young people in Croatia into NEET status using the LFS data in the period 2007-2016. The incidence of NEET status is examined in relation to two alternative outcomes: employment and education ; while, using Heckman selection procedure (Heckprobit), youth NEET status is also empirically tested as a sequential selection process in two alternative and competing paths: (i) young people are first sorted away from employment and subsequently self-select into education or NEET depending on their characteristics (“coping”), and (ii) individuals sort themselves away from education and are subsequently sorted into employment or become NEET (“opting”). Our results suggest that individual selection into education (“opting”) is of limited relevance for explaining the subsequent sorting into NEET, both prior to and during/after the crisis. Labour market sorting, conversely, appears highly significant in determining the subsequent choices between NEET status and education (“coping”), with the implication that (unobserved) employability remains a significant factor determining whether non-employed youth invest in education ; a process that has been intensified with the crisis. These results suggest that the role of education in Croatia is not a skills-provider but often serves as a refuge/coping strategy.

youth unemployment ; labour market exclusion ; NEET ; education ; selection ; Croatia

Presenter: Iva Tomić