Labor-Market Scars When Youth Unemployment is Extremely High: Evidence from Macedonia

Petreski, Marjan; Mojsoska-Blazevski, Nikica; Bérgolo, Marcelo

doi:10.1080/00128775.2016.1261631

Cited by 20 publications

(15 citation statements)

References 36 publications

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“…Panel data from Italy show that while in the northern regions there is a scarring effect from unemployment, in the southern area of the country-where overall unemployment is much more widespreadthe impact is not significant because unemployment is more common and therefore less stigmatizing (Lupi and Ordine 2002). Petreski, Mojsoska-Blazevski, and Bergolo (2016) do not find a wage scar in Macedonia during a period of very high overall unemployment. Similarly, we may assume that during a severe recession, unemployment experience is perceived as "normal" and does not necessarily signal a low-quality worker.…”

Section: Early Employment Uncertainty and Later Careermentioning

confidence: 57%

Does Early Career Unemployment at the Peak of a Recession Leave Economic Scars? Evidence from Estonia

Unt¹,

Täht²

2020

The ANNALS of the American Academy of Political and Social Scie

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On average, individuals who have experienced unemployment are disadvantaged in terms of later lifetime earnings. Those who graduated from school during the Great Recession are especially prone to have experienced bouts of unemployment, but we know little about how much they suffer in later career earnings. Estonia was heavily hit by the economic crisis but recovered relatively quickly. This study explores poverty and earnings effects for a cohort of recession graduates in Estonia, finding that early career unemployment is not a direct trigger for poverty risk and income loss five years later. The main mechanism for disadvantage among recession graduates is recurring unemployment, meaning that the scars of initial unemployment are avoided only if graduates succeed in avoiding unemployment later. Findings also indicate that during an economic downturn, employers may not regard unemployment as a signal of lower productivity or depreciation of skills.

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Section: Early Employment Uncertainty and Later Careermentioning

confidence: 57%

Does Early Career Unemployment at the Peak of a Recession Leave Economic Scars? Evidence from Estonia

Unt¹,

Täht²

2020

The ANNALS of the American Academy of Political and Social Scie

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“…The first instrument – country employment conditions at the time when the individual finished schooling – is not uncommon in the literature; it has been originally used by Gregg (2001) and subsequently in Gregg and Tominey (2005), Schmillen and Umkehrer (2013), Ghirelli (2015), and Petreski et al (2017). Actually, all these studies use municipal unemployment rates, since they usually analyze one country only and rely on local labor market conditions as instrument.…”

Section: The Methodological Designmentioning

confidence: 99%

Public provision of employment support services to youth jobseekers

Petreski

2018

IJM

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Purpose The purpose of this paper is to investigate if public provision of employment support services to youth leads to reduced informality and increased wages in transition economies. Design/methodology/approach The author uses the school-to-work transition data sets of the International Labor Organization for seven transition economies of Southeast Europe and the Commonwealth of Independent States. The author focuses on two econometric issues: the selectivity into informal employment and the endogeneity of the public employment support service provision with respect to informal employment and wages. The authors achieves identification by employing internal regressors which are uncorrelated with the product of heteroskedastic errors, a-la Lewbel (2012), as the author could not prove the external validity of the commonly used external instruments in similar contexts. Findings Results suggest that the public provision of employment support services matters for relegating informal employment, but not for wages, in general. Placement in education or training programs is most powerful in reducing informal employment among the four different employment support services, while only advice for job search works positively for wages probably through enabling better match. Social implications Increasing budget allocations, varying the array of public employment support measures, enhanced targeting, and advancement of the profiling system may significantly contribute to strengthening the public employment support service effect on youth employment in transition economies. Originality/value The paper brings a couple of novelties to the current literature. First, it is among the early papers dealing with the issue of informality, public employment support service and labor market prospects of youth in general in a rigorous manner. Second, it fills an important gap for transition economies which were less researched due to the long-lasting transition process as well due to data scarcity. Third, it utilizes the recently collected School-to-Work Transition Surveys (SWTS). Finally, and likely most importantly, it thoroughly addresses the issues of selectivity bias and endogeneity of PESS by utilizing a recent approach of Lewbel (2012) whereby internally generated variables are used as instruments. Hence, the paper accounts for the endogeneity stemming from unobservables in a novel manner, contrary to the common approaches in the literature based either on propensity score matching addressing selectivity on observables only, or relying on commonly used instruments in the labor market literature – mainly regional employment variables – whose external validity is easily disputed.

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“…Studies (e.g. Gregg, 2001; Petreski et al, 2016) proposed regional unemployment rates at the time the person exited schooling as an instrument. However, its strict exogeneity has been frequently questioned: local employment conditions at the time when the person completed schooling are likely to be related to some parents’ characteristics which may be related to shaping the child’s subsequent labour-market performance.…”

Section: Literature Overviewmentioning

confidence: 99%

Youth survival in the labour market: Employment scarring in three transition economies

Mojsoska-Blazevski

Petreski

Bojadziev

2017

Econ. labour relat. rev.

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The aim of this study is to examine whether the prevalent and fairly long unemployment spell of young Macedonians, Serbians and Montenegrins early in their career has negative effects on their subsequent labour-market performance: the so-called employment scarring. We first model unemployment spell as a function of individual and household characteristics and work attitudes and preferences using a discrete-time duration method. Then, we estimate the survival probabilities to examine the potential existence of employment scarring. The results provide some evidence for the potential presence of employment scarring in the three countries. The scars are largest in Serbia for all durations of the unemployment spell followed by Macedonia; they are weakest in Montenegro.

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Labor-Market Scars When Youth Unemployment is Extremely High: Evidence from Macedonia

Cited by 20 publications

References 36 publications

Does Early Career Unemployment at the Peak of a Recession Leave Economic Scars? Evidence from Estonia

Does Early Career Unemployment at the Peak of a Recession Leave Economic Scars? Evidence from Estonia

Public provision of employment support services to youth jobseekers

Youth survival in the labour market: Employment scarring in three transition economies

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