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Manuscripts

• Irena Kogan, Michael Gebel and Clemens Noelke:
  Educational expansion and social inequality in Central and Eastern European countries.
  Abstract: This article summarizes the results of a large-scale comparative study on the social selectivity of education attainment in Central and Eastern European (CEE). CEE countries provide an interesting case study in view of their variation in processes of post-secondary education expansion and differentiation as well as their degree of vocational orientation at the secondary level. Drawing on high quality, national micro data, we find that students from disadvantaged family backgrounds who manage to enter post-secondary education are "diverted" to second-tier post-secondary institutions, while long-term university programs are more dominated by students whose parents have an academic background. At the secondary level, we confirm the pattern of negative selection of students from lower social backgrounds into lower vocational programs, which is well known for Western European countries. Interestingly, this diversion effect at the secondary level is especially pronounced in CEE countries that inherited a strong secondary vocational system
  

• Irena Kogan, Clemens Noelke and Michael Gebel:
  Expansion, diversification and marketization of tertiary education and their impact on youths’ employment entry chances in Central and Eastern Europe.
  Abstract: This paper analyzes results of the first large-scale comparative study on labor market integration of higher education graduates in ten Central and Eastern European (CEE) countries. CEE countries provide an interesting case study in view of their variation in processes of higher education expansion, differentiation and marketization. Drawing on high quality, national longitudinal and/or retrospective life history data, we analyze the performance of higher education graduates at labor market entry in terms of the speed of entry to the first significant job, the first job quality as well as mobility patterns out of the first job. The analyses are further complemented with a study on social selectivity in higher education attainment. Our results show clear evidence that higher education expansion, differentiation and marketization shape inequality patterns between different tertiary graduates groups as well as compared to upper secondary school graduates.

• Anna Baranowska and Michael Gebel:
  Does Diversification really matter? An Analysis of Labour Market Entry of Higher Education Graduates in Ukraine and Poland.
  Abstract: This paper investigates labor market chances of different groups of tertiary graduates from the highly differentiated Polish and Ukrainian post-secondary education systems. Differences in labor market integration are empirically analyzed using representative, large-scaled, school-leaver surveys for Poland and Ukraine and applying state-of-the-art research methods of dynamic analysis. More specifically, we compare the performance graduates from post-secondary vocational schools, vocational colleges, bachelor and master university programs. Furthermore, our detailed data allow for a micro-level assessment of the impact of higher education marketization and privatization in Poland and Ukraine. With the liberalization of markets and education systems, private higher education providers emerged in CEE in order to satisfy the increasing individual demand for higher education. The economic transformation crises after the fall of socialism affected also the public higher education sector and led to disproportional fiscal cuts in public funding for higher education. In reaction, public higher education institutions introduced instruments of marketization by charging fees from certain groups of students, particularly part-time students. In a way, public providers have become semi-privatized by depending increasingly on tuition fees and they entered direct competition with private providers. In our paper, we compare the labor market performance of graduates from state-financed public institutions, tuition-paying students from public institutions as well as graduates from private institutions. Herewith we explore whether the emergence of private providers and tuition-based public study places introduced new lines of differentiation (in terms of quality, prestige and selectivity) within the higher education sector in CEE beyond the existing ones between universities and second-tier, lower tertiary institutions.
  

• Teo Matkovic and Irena Kogan:
  Leaving early: the determinants and the consequences of student non-completion of higher education in Croatia, Serbia and the Ukraine.
  Abstract: An enormous rate of education expansion observed in Croatia, Serbia and Ukraine imply that some students are left behind in their race for tertiary education diplomas and drop out of the system without completion. Some would even voluntarily drop out from long tertiary programs if they are likely to receive good job offers before graduation. To gain more insights on this ever growing problem the paper first presents the theoretical background for examining student non-completion and identifies factors facilitating individual risks of dropping out of higher education. In the second part of the theoretical discussion the consequences of tertiary education drop-out are highlighted based on the main argumentation of the human capital, signalling and credentialist theories. Thus far the bulk of empirical research on tertiary education non-completion stems from the US and the UK, and the question we pursue in the study is whether their findings are generalizable also for countries with different structures of higher education and countries which undergo radical economic transformations. Based on three school leaver surveys capturing cohorts of young people enrolled in tertiary education in the late 1990s-early 2000s, surveys sharing similar design and a comparable set of variables the paper first presents descriptive evidence on the prevalence of the drop-out phenomenon. We show that the drop-out share is quite high (at about 30% of all those enrolled in tertiary education) in the binary organized tertiary education of Serbia and Croatia and is much less pronounced (below 10%) in the diversified and sequentially organized Ukrainian system of higher education. Our main analyses focus on estimating the propensity of young people enrolled at the tertiary level to complete their studies versus dropping out, for the latter differentiating between those who dropped out in their first year of studies and those who accumulated more human capital spending several years in the system. An extensive set of demographic, family background and study characteristics available in our datasets allows for a detailed account of selectivity into tertiary education non-completion. In the final stage with the help of propensity score matching we investigate the labour market chances of graduates vs. drop-outs several years after leaving education in a number of outcomes (e.g. chances for stable employment, status of their job, education-job mismatch, income).

• Clemens Noelke and Daniel Horn:
  The organization of vocational education: Hungary as a test case.
  Abstract: Hungary represents a unique test case to assess how non-college-bound youth can be prepared best for a successful transition from school to work. This issue is of crucial importance across advanced countries, since non-college-bound youth have experienced substantial deterioration of labour market outcomes over the past four decades. In particular, vocational education has received a lot of attention as a bridge for young people into secure, skilled employment. However, questions remain about optimal ways of organizing vocational programs at the secondary level, particularly regarding the extent of employer involvement in the provision of vocational training. Following the move towards capitalism, the Hungarian system of vocational education witnessed drastic reforms in this regard. Within a short period of time, many employers withdrew from providing training to vocational school students, which had been common practice under socialism. As a response to waning employer involvement, training was increasingly offered within school workshops. Using cohort data on the extent of employer- vs. school-provided training measured at the level of the 20 Hungarian counties, we assess whether the substitution of school-based with enterprise-base training was of any consequence for the labour market prospect of Hungarian vocational school students. Controlling for unobserved cohort, period and county effects, as well as time-varying county-specific economic conditions, we find no evidence that cohorts experiencing training in schools rather than enterprises have experienced worse labour market outcomes.

• Irena Kogan, Anna Baranowska, Michael Gebel, Teo Matkovic:
  Tell me whom you know… Personal contacts and job entry in Eastern European countries.
  Abstract: Back in 1989 Viktor Nee advanced the claim that the more economic coordination is based on market principles, the stronger the relationship between skills or human capital (measured by education) and economic rewards. Now we have considerable evidence that the correlation between education and earnings as well as education and job entry has been growing in a number of post-socialist CEE countries (see Flabbi et al. 2008, Fleisher et al. 2005, Svejnar 1999, Verhoeven et al. 2008; Gorodnichenko and Sabirianova 2005; Campos and Joliffe 2007; Munich et al. 2005; Newell and Socha 2007; Kogan et al. in preparation). Nee (1989) also hypothesized that as the role of human capital in determining job outcomes increases, the role of political power specific to the socialist regime declines. Whereas the role of old-style political capital might no longer be an issue among young school leavers entering the world of work in the 2000s (see Gerber 2000, Rona-Tas 1994), social capital in general might still play an important role. We know, for example, that under socialism networks were important to secure favours and obtain access to scarce resources (Field 2003, Ledeneva 1998). Ledeneva (1998) argues that a systematic use of connections (i.e., nepotism) was a natural response of individuals to the absence of market relations in Russia, a practice also shared by other Eastern European countries. Given how quickly Central and Eastern European countries embraced Western capitalism, and their rapid integration into European institutions, it is reasonable to expect that the role of social capital in general and personal connections in particular for securing labour market positions should change since the downfall of socialism and might vary across countries according to the degree of market and economic reforms.

  The aim of this paper is to explore the relationship between the levels of market development in various CEE countries and the role of personal contacts for the first job entry among young school leavers. In particular the paper looks at the role of the social contacts for a possible trade off between the speed of the labour market entry and the quality of the first employment in four Central and Eastern European countries: Serbia, Croatia, Poland and Ukraine. The countries analysed in the paper represent the variety in starting conditions, transformation trajectories and institutions observed in the region. Among the countries emerging from the Soviet Union, we focus on Ukraine, which experienced very turbulent times after 1991. We also study two countries emerging from the Socialist Federal Republic of Yugoslavia (SFRY), Serbia and Croatia, which also experienced quite troubled transformation processes. Finally, we study Poland, which belonged to the more developed socialist economies already in 1989.

Before deriving specific hypotheses about the effects of personal resources on the speed of the first job entry and its quality we present a general theoretical framework of our analyses based on the job search model. The hypotheses as for varying effects of social contacts in the CEE countries are then tested with the data from school-leaver surveys for all countries included. In the first step of the empirical analyses we estimate a propensity of searching for the first job relying on personal contacts as opposed to solely formal means of the job search as a function of the demographic and human capital characteristics of young people and their socio-economic background. In the second step by means of the propensity score matching technique we compare outcomes of the job search in terms of the propensity of finding first significant employment 6, 12 and 24 months after leaving education, as well as the quality of the first job measured against the ISEI scale between those school leavers who adhered to personal contacts and those who relied solely on formal methods of job search. Estimates of the causal effect of the job search means on the probability of landing the first significant job and its quality are then compared across the analyzed countries and discussed in the concluding section.

• Anna Baranowska, Michael Gebel and Teo Matkovic
  Informal employment at labour market entry. A comparative study of Croatia, Poland and Ukraine.
  Abstract: Using longitudinal, comparable micro-data from three recent school-leaver surveys, this paper provides first empirical evidence on the determinants and early career consequences of informal employment in early labour careers of graduates in Croatia, Poland, and Ukraine. While the share of informal first jobs is highest in Ukraine, the country with the worst institutional mix of high taxes, low policy quality and widespread corruption, we find similar allocation patterns into informal jobs based on individual resources and employer's characteristics in all three countries. Furthermore, we can show that career damages in terms of lower employment and formal employment chances are most pronounced in Poland, while in Ukraine, the informal sector seems to provide a "parallel economy" of rather secure (or repeated) informal jobs but also lower upward mobility into formal jobs. In contrast, informal sector activity is least stable in Croatia, where subsequent non-employment risks but also ways to formal employment are very pronounced.

• Anna Baranowska, Michael Gebel and Irena Kotowska
  (work financed by GDN / CERGE-EI Foundation Grant RRCVIII+78):
  The role of fixed-term contracts at labour market entry in Poland: Stepping stones, screening devices, traps or search subsidies?
  Abstract: Poland has become an interesting outlier in Europe in terms of employment flexibility, with an extremely high incidence of fixed-term contracts, particularly at labour market entry. In this article, detailed retrospective data from the Polish School Leavers Survey are used to analyse the dynamics of entry and exit from fixed-term contracts. The results show that neither firm-based vocational training nor diplomas from more selective tertiary education institutions provide graduates better access to secure entry positions. Regarding exit dynamics, transition patterns from fixed-term contracts into unemployment suggest that the timing of exits often coincides with the date of becoming eligible to collect unemployment benefits. The results also imply that, in Poland, fixed-term contracts might serve employers by helping them to identify the best workers.

• Anna Baranowska, Michael Gebel and Irena Kotowska
  (work financed by GDN / CERGE-EI Foundation Grant RRCVIII+78):
  The effects of fixed-term contracts on wages in the early career in Poland
  Abstract: Poland has become an interesting outlier in Europe in terms of employment flexibility with an extremely high incidence of fixed-term contracts (second largest in Europe after Spain). This applies particularly to young people, who currently very rarely start employment career with permanent contracts. Drawing on a large-scale Polish School Leavers Survey with over 20,000 graduates, this study evaluates the consequences of fixed term contracts for level of earnings and for wage growth. The key findings can be summarised in the following way:

  • the difference in the average level of earnings between young workers, who have different types of contracts suggests a large wage penalty received by graduates entering temporary employment at the start of the working career
  • controlling for observed determinants of contract type reduces the difference in earnings of temporary and permanent workers, but substantial wage gap persists
  • temporary workers, who receive permanent contracts from their employers, do not gain after this change; the lack of substantial wage increase suggests that the wage penalty of temporary workers concerns association rather than a causal effect of contract type.

  Our findings reveal that the wage gap observed between workers with different types of contract and similar observed characteristics may be due to influences, which cannot be fully controlled, such as the bargaining power of employer or the characteristics of the enterprise, where the job was offered.

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