Bucking the Trend: Female Labor Market Participation in Kosovo

This paper adds to the limited research conducted on labor markets with low female labor force participation, providing the first multivariate analysis for Kosovo. The determinants of female labor force participation (FLFP) in Kosovo are investigated utilizing an eclectic model, comprising of individual, household, and socio-economic determinants, to analyze data from the Kosovo Labor Force Survey. Both supply and demand factors contribute to the explanation of the low FLFP in Kosovo. The results confirm that: age, marital status, education, labor market demand and the composition of the household are significant determinants of FLFP. These findings indicate the importance of taking a household level approach when analyzing labor force participation in countries with low female force participation

Human capital and international competitiveness in Europe, with special reference to transition economies

This paper assesses the impact of human capital endowments on international competitiveness in Europe, with special reference to transition economies in Central and Eastern Europe (CEE). The analysis uses longitudinal data for 27 European economies over the period 1995-2010. In line with the orthodox theory, a positive relationship is found between the labor force’s level of educational attainment and competitiveness. While in the European Economic Area (EEA17) tertiary education is the only significant education-based determinant of the export market share, in CEECs both the shares of the workforce with secondary and tertiary education are significant with the former having a greater impact. Some evidence is found for the hypothesized impact of the quality of education

The Effect of Human Capital on Inwards FDI: Evidence from European transition economies

A country’s human capital has been neglected as a potential determinant of inwards foreign direct investment (FDI), both in theory and empirical research. When human capital has been included in models of the determinants of FDI, it appears simply as a control variable or one of the variables in a “kitchen sink” approach, usually without any theoretical rationale for its inclusion or critical discussion of the measures used. The mis-specification that may result from this is advanced as one of the potential explanations for the very diverse findings in previous literature and the failure of the meta-regression analysis (MRA) reported in this thesis to find an ‘authentic’ effect of human capital on inwards FDI. Accordingly, this research seeks to fill this gap, by identifying the mechanisms through which human capital is expected to attract FDI to European transition economies and drawing conclusions about the most appropriate measures of human capital given the characteristics of the former communist (education) system. The ‘productivity-enhancing’ skills and traits that (foreign) investors are likely to value in such economies are identified and the manner in which these skills are developed is analysed. In the light of this analysis the conventional human capital measures used in empirical analyses are critically assessed. These contributions are used to develop an empirical model for estimating the effect of human capital on inwards FDI at country-, sector- and industry-level in 12 European transition economies during the period 1995-2008. Consistent with the results of previous studies, as suggested by the MRA, no significant effect of traditional volume measures of human capital on FDI inflows/stocks is found. However, some evidence is presented in this thesis indicating that the quality dimension of human capital as measured by cognitive skills proxies may affect inwards FDI in the manufacturing sector. Accordingly, several potential explanations for the findings and some of their implications for future macro-level research focusing on the effects of human capital are explored

The relative and overall effectiveness of different ALMPs in reducing unemployment. An analysis using Inverse Probability Weighting-Regression Adjustment

This paper analyses the relative and overall effectiveness of three active labour market measures implemented in Kosovo: On the Job Training (OJT); Internship Scheme (IS) and Institution and Enterprise Training (IET). This analysis will use two different estimation techniques: Multinomial Probit and Inverse Probability Weighting – Regression Adjustment (IPW-RA). The second estimation technique allows us to extend from the ‘participant vs. non- participant’ analysis of Propensity Score Matching to a multivalued treatment assignment model while utilising an appropriate set of covariates which are available for both treated and control groups. When using observational data ideally the data for the control group should be derived from the same data source. Due to the unavailability of data for a control group from the same data source (UNDP) and in order to assess the overall effectiveness of the active policies, i.e. to assess the effectiveness of each active measure in raising the probability of participants gaining employment compared to that of non-participants, the empirical analysis presented in this study will construct a control group from the Labour Force Survey (LFS) in Kosovo for 2012, the same year as the UNDP data. Therefore the aim of this study is to investigate whether being a participant in one of the three active measures improves the likelihood of gaining employment, and if so gaining an employment contract, compared to being a non-participant

The Effectiveness of Active Labour Market Policies in Reducing Unemployment in Kosovo

This paper investigates the effectiveness of Active Labour Market Policies (ALMP) in Kosovo’s labour market. The main aim of this paper is to evaluate the relative effectiveness of three active measures: On the Job Training (OJT), Internship Scheme (IS) and Institution and Enterprise Training (IET). The estimation techniques used for this empirical investigation are Propensity Score Matching (PSM) and Inverse Probability Weighting – Regression Adjustment (IPWRA). Since there is a range of active programmes in which an individual can participate, the choice of participation should be extended from ‘participation vs. non-participation’ into a multiple choice model (Lechner, 2001). The approach used in this analysis provides information on whether participants of one programme would have performed better if they had participated in another programme. The second estimation technique, IPWRA, allows extending from the ‘participant vs. non-participant’ analysis of PSM to a multivalued treatment assignment model while utilising an appropriate set of covariates which are available for both the treated and control groups. Therefore this paper investigates whether being a participant in one of the three active measures improves the likelihood of gaining employment in general and being engaged in the formal labour market in particular compared to being a non-participant and also compared to the other two programmes

The effectiveness of ALMPs in reducing unemployment in the EU countries with particular reference to the role and size of the informal sector

This paper investigates the efficiency of Active Labour Market Policies (ALMP) in European labour markets by applying two different methodological approaches. The first approachis a matching function using country-level annual data from 2010 to 2015 and a sample of 14 EU countries. Matching efficiency is analysed via a panel Fixed and Random Effects estimation. The second empirical approach uses annual data in a larger sample of 27 EU countries for the period 2005 to 2015 time periodand applies Generalised Methods of Moments (GMM). The results from the first empirical approach suggest that the ALMPs have a statistically significant effect in increasing matching efficiency; however, the economic impact is quite small. Additionally, the estimation also findsevidence to suggest that the labour markets in the EU countries might exhibit increasing returns to scale. In such case, the positive externalities of the search intensity of unemployed workers and vacancies might prevail creating multiple equilibria in the labour market. Estimations also suggest that this result is more likely driven by labour markets in the transition economies and not by those of Western economies. The results from the second empirical approach do not suggest asignificant effect of ALMPs. Overall, the study provides limited evidence supporting the significant role of ALMPs in reducing unemployment and offers insightful findings for the policy-making community

A Review of Evaluation Methodology and the Microeconomic Empirical Studies

This study will provide an assessment of the methodology applied in evaluating Active Labour Market Policies (ALMP). The aim of this study is to: (i) analyse the evaluation methodologies employed in microeconomic policy analysis and identify the key assumptions within the common frameworks; and (ii) review the empirical evidence specifically for European transition economies. The key role of this study is to examine the evaluation problem and the construction of counterfactuals for the reliability of the results. It is crucial to understand whether a particular active programme has been successfully designed, targeted and implemented and at the same time to evaluate the impact of ALMPs on the participants‘ future labour market outcomes. The evaluation analysis becomes even more difficult in a quickly changing environment, which is the case in most transition economies. According to Heckman et al. (1999), the choice of the most appropriate estimator depends on three factors: the assignment of individuals into the programmes, the quality of data available and the specific question to be answered. In social experiments the assignment of the participants into the programmes is performed randomly, hopefully assuring balance in observed and un-observed characteristics of the treated and control persons i.e., the characteristics of the two groups are similar hence comparable (Heckman et al., 1996; 1999). In contrast, in observational studies the assignment into the programmes is not random and thus causes possible selection bias. Choosing from the wide range of available evaluation methods when analysing the microeconomic effectiveness of active policies is a big challenge for researchers. This study provides an explanation of the evaluation problem, with particular emphasis given to the construction of the counterfactuals which provides arguments for using Propensity Score Matching and more specifically how this method may correct for any selection bias followed by an assessment of the efficiency of different matching methods