Naslov
Matching, adverse selection and labour market flows in (post)transition setting: The case of Croatia

Autori
Tomić, Iva ; Domadenik, Polona

Vrsta, podvrsta i kategorija rada
Sažeci sa skupova, neobjavljeni rad, znanstveni

Skup
23rd annual EALE (European Association of Labour Economists) Conference

Mjesto i datum
Paphos, Cipar, 22.09.2011. - 24.09.2011

Vrsta sudjelovanja
Poster

Vrsta recenzije
Međunarodna recenzija

Ključne riječi
matching; adverse selection; firing costs; unemployed; transition; Croatia

Sažetak
This paper studies employment prospects of different types of job-seekers in Croatia by upgrading the model of adverse selection with firing costs. The main assumption of the model is that employers perceive labour market status as a signal of job-seekers’ productivity, which means that the unemployed group is being perceived as less productive. Since firing costs are high, employers cannot ‘afford’ to hire from this group and, thus, there is an adverse selection in the labour market. Based on Labour Force Survey data for the period 1996-2009 we find the existence of an adverse selection in Croatian labour market. Namely, reservation wage - the main determinant of firing costs in the model - has a positive impact on the probability to change a job for employed job-seekers, while it negatively affects the probability to ‘switch’ for unemployed job- seekers. However, if reservation wage is treated as endogenous in the original model, the instrumental variable estimation shows that the effect of reservation wage on the probability to ‘switch’ becomes positive and significant only for the unemployed group. This is explained with the effect of educational attainment that serves as one of the ‘instruments’ and obviously works as an efficient signal for workers’ productivity among the unemployed. Nevertheless, the effect of reservation wage on employment probabilities for both employed and unemployed group is getting lower over time, especially after legislation reform in 2004, indicating lower impact of firing costs. Finally, the hypothesis on self- discrimination of the unemployed receiving unemployment benefits is tested, showing positive impact of unemployment benefits on the reservation wage, and a negative one on the probability to find a job.

Izvorni jezik
Engleski

Znanstvena područja
Ekonomija

POVEZANOST RADA