The effects of the large-scale traineeship reform on labour market outcomes of youth population in Croatia – SOR

Commissioned by: The Institute of Economics, Zagreb (Tvoj Grant@EIZ)
Project manager: Iva Tomić
Collaborator: Ivan Žilić
Project duration: Febraury 13, 2018 – September 30, 2018

The main objective of this project was to estimate the causal effect of SOR (vocational training for work without commencing employment) reform on the labour market outcomes of young population in Croatia.

By comparing groups of people based on eligibility status before and after the reform, we inferred unbiased causal intent-to-treat effect of the reform, thus documenting the totality of the reform effects. The results of this research can serve as input to cost-benefit analysis of SOR reform and as a step forward to evidence-based policy. Additionally, given the universal nature of youth unemployment issues and immense funds allocated to meliorate them, this research significantly contributes to the literature in the field of labour economics.

Activities within this project included the analysis of the data with the proposed methodology, review of existing studies dealing with evaluation of active labour market policies, especially those dealing with SOR measure, and providing some sound conclusions and possible policy recommendations. Given both academic and policy importance of the proposed research, the dissemination of the results took different forms: from the presentation of the study for the wider audience at the Institute of Economics, through participation in different workshops/seminars/round tables, as well as several important scientific conferences in the field, while the final outlets for publication were EIZ Working Papers, after which the paper was submitted for publication in a high-quality international journal.

Core analysis of this project was focused on SOR eligible individuals (a person aged from 18-29) instead of treated (participating) individuals as was the case in the existing literature. In order to estimate the effect of SOR reform on the labour market outcomes of eligible cohort, difference-in-differences strategy was used, which is a standard approach in the policy-evaluation literature, and it was applied to the individual-level microdata from the Croatian Labour Force Survey (LFS).