IDEAS home Printed from https://ideas.repec.org/a/taf/pocoec/v24y2012i1p39-72.html
   My bibliography  Save this article

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

Author

Listed:
  • Iva Tomić
  • Polona Domadenik

Abstract

This article studies employment prospects of different types of job seekers in Croatia by upgrading the model of adverse selection with firing costs. Based on Labour Force Survey data for 1996--2006 we find the existence of adverse selection in the Croatian labour market. Reservation wage, as the main determinant of firing costs in the model, positively affects the probability of changing job for employed job seekers, while it has a negative impact on the probability of ‘switching’ for unemployed job seekers. However, if reservation wage is treated as endogenous in the model, instrumental variable estimation shows that its effect on the probability of ‘switching’ becomes positive and significant only for the unemployed group. This is explained by the effect of educational attainment, which serves as the ‘instrument’ and obviously works as an efficient signal for workers' productivity among the unemployed. Nevertheless, the effect of reservation wage on employment probabilities for both groups is declining over time, especially after the legislative reform in 2004, indicating a lower impact of firing costs. Finally, the hypothesis on self-discrimination of the unemployed receiving unemployment benefits is tested, showing a positive impact of unemployment benefits on the reservation wage and a negative one on the probability of finding a job.

Suggested Citation

  • Iva Tomić & Polona Domadenik, 2012. "Matching, adverse selection and labour market flows in a (post)transition setting: the case of Croatia," Post-Communist Economies, Taylor & Francis Journals, vol. 24(1), pages 39-72, September.
  • Handle: RePEc:taf:pocoec:v:24:y:2012:i:1:p:39-72
    DOI: 10.1080/14631377.2012.647969
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/14631377.2012.647969
    Download Restriction: Access to full text is restricted to subscribers.

    File URL: https://libkey.io/10.1080/14631377.2012.647969?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Iva Tomic, 2020. "Employment protection reforms and labour market outcomes in the aftermath of the recession: Evidence from Croatia," Public Sector Economics, Institute of Public Finance, vol. 44(1), pages 3-39.
    2. Domadenik, Polona & Far?nik, Daša & Pastore, Francesco, 2013. "Horizontal Mismatch in the Labour Market of Graduates: The Role of Signalling," IZA Discussion Papers 7527, Institute of Labor Economics (IZA).
    3. Nikolic, Jelena & Rubil, Ivica & Tomić, Iva, 2017. "Pre-crisis reforms, austerity measures and the public-private wage gap in two emerging economies," Economic Systems, Elsevier, vol. 41(2), pages 248-265.
    4. Richard Disney & Jelena Laušev, 2011. "Monopsony With Heterogeneous Labour: Evidence From Economic Transition," Discussion Papers 11/11, University of Nottingham, School of Economics.
    5. Škrinjarić Bruno, 2023. "Competence Proximity to Employers’ Requirements and Labour Market Success of Economics and Business Graduates," South East European Journal of Economics and Business, Sciendo, vol. 18(2), pages 140-161, December.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:pocoec:v:24:y:2012:i:1:p:39-72. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/CPCE20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.