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Employment protection reforms and labour market outcomes in the aftermath of the recession: Evidence from Croatia*
Iva Tomić* 
Iva Tomić
Affiliation: Institute of Economics, Zagreb, Department for Labor Markets and Social Policy, Zagreb, Croatia
 0000-0002-4706-7881
Correspondence
itomic@eizg.hr
Article | Year: 2020 | Pages: 3 - 39 | Volume: 44 | Issue: 1 Received: June 1, 2019 | Accepted: November 13, 2019 | Published online: March 3, 2020
|
FULL ARTICLE
FIGURES & DATA
REFERENCES
CROSSMARK POLICY
METRICS
LICENCING
PDF
|
|
2008
|
2013
|
2014
|
|
EP for regular contracts (EPR)
|
2.55
|
2.55
|
2.28
|
|
EP against collective dismissals (EPC)
|
3.75
|
3.00
|
2.25
|
|
EP for temporary contracts (EPT)
|
2.21
|
1.96
|
1.96
|
|
EP for regular open-ended contracts including
collective dismissals (EPRC)
|
2.89
|
2.68
|
2.27
|
|
Ratio of EPT and EPR
|
0.87
|
0.77
|
0.86
|
|
Ratio of EPT and EPRC
|
0.76
|
0.73
|
0.86
|
Notes: Values represent EPL indices based on OECD methodology. Source: Kunovac (2014) and CNB (2014).
Notes: Monthly data are extracted from yearly datasets. No weights are included. Circles represent share of employed/employees in the total working-age (15-64) population and/or share of temporary employees/fixed-term contracts among all employees aged 15-64, while lines represent local linear smoothing plot. Source: Author’s calculation based on Croatian LFS.
Note: Results are from linear probability model with robust standard errors. Employment share includes only employees (15-64) and not self-employed persons and family workers. Quarterly data are extracted from yearly datasets. Regressions control for a basic set of individual characteristics, i.e., age dummies, gender, marriage status and nativity plus time trend and quarterly GDP growth rate. Other model specifications – such as those additionally including education, region and level of urbanisation – are also tested and the results are more or less the same (available upon request). Source: Author’s calculation based on Croatian LFS.
|
Marginal effects
|
Temporary employment (within employees)
|
Total employees (within active)
|
|
Both reform variables
|
Cumulative effect
|
Only EPR reform
|
Both reform variables
|
Cumulative effect
|
Only EPR reform
|
|
EPT liberalisation
(2013m7-2014m7)
|
0.015***
|
|
|
-0.002
|
|
|
|
(0.005)
|
|
|
(0.006)
|
|
|
|
EPR liberalisation
(2014m8-2017m12)
|
0.042***
|
|
0.032***
|
0.068***
|
|
0.069***
|
|
(0.005)
|
|
(0.004)
|
(0.006)
|
|
(0.005)
|
|
Both reforms
(2013m7-2017m12)
|
|
0.025***
|
|
|
0.024***
|
|
|
|
(0.005)
|
|
|
(0.005)
|
|
Notes: Besides the reform variables presented, these model specifications include a basic set of individual characteristics, i.e., age dummies, gender, marriage status, nativity and education level, plus urbanisation and region dummies as well as time trend and quarterly GDP growth rate. Employment share includes only employees (15-64) and not self-employed persons and family workers. More detailed information on probit regressions, including other model specifications, is available in the Appendix and upon request. Robust standard errors in parentheses. *** p<0.01, ** p<0.05, * p<0.1. Source: Author’s calculation based on Croatian LFS.
|
Marginal effects
|
Temporary employment (within employees)
|
Total employees (within active)
|
|
Both reform variables
|
Cumulative effect
|
Only EPR reform
|
Both reform variables
|
Cumulative effect
|
Only EPR reform
|
|
EPT liberalisation
(2013m7-2014m7)
|
0.015***
|
|
|
-0.004
|
|
|
|
(0.005)
|
|
|
(0.00598)
|
|
|
|
EPR liberalisation
(2014m8-2017m12)
|
0.037***
|
|
0.027***
|
0.044***
|
|
0.047***
|
|
(0.005)
|
|
(0.004)
|
(0.006)
|
|
(0.005)
|
|
Both reforms
(2013m7-2017m12)
|
|
0.023***
|
|
|
0.014**
|
|
|
|
(0.004)
|
|
|
(0.006)
|
|
Notes: Besides the reform variables presented, these model specifications include a basic set of individual characteristics, i.e., age dummies, gender, marriage status, nativity and education level, plus urbanisation and region dummies as well as time trend and quarterly GDP growth rate. Employment share includes only employees (30-64) and not self-employed persons or family workers. More detailed information on probit regressions is available upon request. Robust standard errors in parentheses. *** p<0.01, ** p<0.05, * p<0.1. Source: Author’s calculation based on Croatian LFS.
|
Marginal effects
|
Fixed-term contracts
(against permanent)
|
Temporary employment
(within employment)
|
Total employment
(within active)
|
|
Both reform variables
|
Cumulative effect
|
Only EPR reform
|
Both reform variables
|
Cumulative effect
|
Only EPR reform
|
Both reform variables
|
Cumulative effect
|
Only EPR reform
|
|
EPT liberalisation
(2013m7-2014m7)
|
0.010**
|
|
|
0.015***
|
|
|
-0.011***
|
|
|
|
(0.005)
|
|
|
(0.004)
|
|
|
(0.004)
|
|
|
|
EPR liberalisation
(2014m8-2017m12)
|
0.029***
|
|
0.023***
|
0.040***
|
|
0.030***
|
0.044***
|
|
0.051***
|
|
(0.005)
|
|
(0.004)
|
(0.004)
|
|
(0.004)
|
(0.004)
|
|
(0.003)
|
|
Both reforms
(2013m7-2017m12)
|
|
0.017***
|
|
|
0.024***
|
|
|
0.008**
|
|
|
|
(0.004)
|
|
|
(0.004)
|
|
|
(0.004)
|
|
Notes: Besides the reform variables presented, these model specifications include a basic set of individual characteristics, i.e., age dummies, gender, marriage status, nativity and education level, plus urbanisation and region dummies as well as time trend and quarterlyGDP growth rate. More detailed information on probit regressions is available upon request. Robust standard errors in parentheses. *** p<0.01, ** p<0.05, * p<0.1. Source: Author’s calculation based on Croatian LFS.
Note: Results are from linear probability model with robust standard errors. Employment share includes only employees (30-64) and not self-employed persons and family workers. Quarterly data are extracted from yearly datasets. Regressions control for a basic set of individual characteristics, i.e., age dummies, gender, marriage status and nativity plus time trend and quarterly GDP growth rate. Other model specifications – such as those additionally including education, region and level of urbanisation – are also tested and the results are more or less the same (available upon request). Source: Author’s calculation based on Croatian LFS.
Note: Results are from linear probability model with robust standard errors. Quarterly data are extracted from yearly datasets. Regressions control for basic set of individual characteristics, i.e., age dummies, gender, marriage status and nativity plus time trend and quarterly GDP growth rate. Other model specifications – such as those additionally including education, region and level of urbanisation – are also tested and the results are more-or-less the same (available upon request). Source: Author’s calculation based on Croatian LFS.
|
Variables
|
Total
|
Employed
|
Employees
|
Temporary
employees
|
|
Mean
|
Std. Dv.
|
Mean
|
Std. Dv.
|
Mean
|
Std. Dv.
|
Mean
|
Std. Dv.
|
|
Labour market
status
|
|
|
|
|
|
|
|
|
|
Active
|
0.65
|
0.48
|
|
|
|
|
|
|
|
Employees
|
0.47
|
0.50
|
0.83
|
0.38
|
|
|
|
|
|
Self-employed
|
0.15
|
0.36
|
0.15
|
0.36
|
|
|
|
|
|
Temporary employees
|
0.16
|
0.36
|
0.16
|
0.36
|
0.16
|
0.36
|
|
|
|
Fixed-term contracts only
|
0.13
|
0.34
|
0.13
|
0.34
|
0.13
|
0.34
|
0.85
|
0.35
|
|
Precarious employment
|
0.05
|
0.22
|
0.05
|
0.22
|
0.05
|
0.22
|
0.33
|
0.47
|
|
Age
|
|
|
|
|
|
|
|
|
|
15-19 (ref.)
|
0.09
|
0.28
|
0.01
|
0.10
|
0.01
|
0.10
|
0.04
|
0.20
|
|
20-24
|
0.09
|
0.29
|
0.06
|
0.24
|
0.07
|
0.25
|
0.19
|
0.40
|
|
25-29
|
0.10
|
0.30
|
0.12
|
0.32
|
0.13
|
0.34
|
0.24
|
0.43
|
|
30-34
|
0.10
|
0.30
|
0.14
|
0.35
|
0.15
|
0.35
|
0.16
|
0.37
|
|
35-39
|
0.10
|
0.30
|
0.14
|
0.35
|
0.14
|
0.35
|
0.11
|
0.31
|
|
40-44
|
0.10
|
0.30
|
0.14
|
0.34
|
0.14
|
0.34
|
0.08
|
0.28
|
|
45-49
|
0.11
|
0.31
|
0.13
|
0.34
|
0.13
|
0.34
|
0.07
|
0.26
|
|
50-54
|
0.11
|
0.31
|
0.13
|
0.33
|
0.12
|
0.33
|
0.06
|
0.23
|
|
55-59
|
0.11
|
0.31
|
0.09
|
0.29
|
0.08
|
0.28
|
0.03
|
0.18
|
|
60-64
|
0.09
|
0.29
|
0.04
|
0.20
|
0.03
|
0.18
|
0.01
|
0.10
|
|
Individual/household characteristics
|
|
|
|
|
|
|
|
Female
|
0.50
|
0.50
|
0.45
|
0.50
|
0.47
|
0.50
|
0.48
|
0.50
|
|
Married
|
0.59
|
0.49
|
0.68
|
0.47
|
0.66
|
0.47
|
0.43
|
0.50
|
|
Foreign
|
0.11
|
0.31
|
0.10
|
0.30
|
0.10
|
0.30
|
0.10
|
0.31
|
|
Share of dependent persons in the household
|
0.14
|
0.18
|
0.15
|
0.18
|
0.15
|
0.18
|
0.13
|
0.17
|
|
Education
|
|
|
|
|
|
|
|
|
|
Low skilled (ref.)
|
0.23
|
0.42
|
0.13
|
0.33
|
0.09
|
0.29
|
0.11
|
0.31
|
|
Medium skilled
|
0.60
|
0.49
|
0.64
|
0.48
|
0.65
|
0.48
|
0.68
|
0.46
|
|
High skilled
|
0.17
|
0.37
|
0.24
|
0.42
|
0.25
|
0.43
|
0.21
|
0.41
|
|
Area variables
|
|
|
|
|
|
|
|
|
|
Urban
|
0.61
|
0.49
|
0.62
|
0.49
|
0.65
|
0.48
|
0.60
|
0.49
|
|
Central Croatia (w/o Zagreb) (ref.)
|
0.23
|
0.42
|
0.24
|
0.43
|
0.23
|
0.42
|
0.22
|
0.41
|
|
East Croatia
|
0.19
|
0.39
|
0.16
|
0.37
|
0.15
|
0.36
|
0.20
|
0.40
|
|
Zagreb region
|
0.25
|
0.43
|
0.27
|
0.45
|
0.29
|
0.45
|
0.22
|
0.42
|
|
North Adriatic
|
0.13
|
0.33
|
0.14
|
0.35
|
0.14
|
0.35
|
0.13
|
0.34
|
|
South Adriatic
|
0.20
|
0.40
|
0.18
|
0.39
|
0.19
|
0.39
|
0.23
|
0.42
|
|
County unemployment rate
|
0.19
|
0.08
|
0.18
|
0.08
|
0.18
|
0.08
|
0.19
|
0.08
|
|
State of the economy
|
|
|
|
|
|
|
|
|
|
GDP growth rate (qoq)
|
0.05
|
1.21
|
0.05
|
1.23
|
0.06
|
1.22
|
0.17
|
1.12
|
|
GDP growth rate (yoy)
|
0.34
|
3.46
|
0.36
|
3.51
|
0.41
|
3.48
|
0.82
|
3.27
|
|
Firm characteristics
|
|
|
|
|
|
|
|
|
|
Public sector
|
0.36
|
0.48
|
0.36
|
0.48
|
0.36
|
0.48
|
0.21
|
0.41
|
|
Small firm (ref.)
|
0.57
|
0.50
|
0.57
|
0.50
|
0.56
|
0.50
|
0.68
|
0.47
|
|
Medium firm
|
0.20
|
0.40
|
0.20
|
0.40
|
0.21
|
0.40
|
0.16
|
0.37
|
|
Large firm
|
0.23
|
0.42
|
0.23
|
0.42
|
0.23
|
0.42
|
0.16
|
0.37
|
|
Occupation (Managers - ref.)
|
|
|
|
|
|
|
|
|
|
Professionals
|
0.14
|
0.35
|
0.14
|
0.35
|
0.16
|
0.36
|
0.12
|
0.32
|
|
Technicians
|
0.15
|
0.35
|
0.15
|
0.35
|
0.17
|
0.37
|
0.12
|
0.32
|
|
Clerks
|
0.11
|
0.31
|
0.11
|
0.31
|
0.13
|
0.33
|
0.10
|
0.31
|
|
Service & sales
|
0.18
|
0.38
|
0.18
|
0.38
|
0.19
|
0.39
|
0.26
|
0.44
|
|
Agriculture
|
0.08
|
0.27
|
0.08
|
0.27
|
0.01
|
0.08
|
0.01
|
0.09
|
|
Craftsmen
|
0.13
|
0.33
|
0.13
|
0.33
|
0.13
|
0.34
|
0.13
|
0.33
|
|
Plant/machine operators
|
0.10
|
0.31
|
0.10
|
0.31
|
0.12
|
0.32
|
0.11
|
0.32
|
|
Elementary occupations
|
0.07
|
0.26
|
0.07
|
0.26
|
0.08
|
0.27
|
0.15
|
0.35
|
|
Industry (Agriculture, forestry and fishing - ref.)
|
|
|
|
|
|
|
|
Industry (except manufacturing & construction)
|
0.03
|
0.17
|
0.03
|
0.17
|
0.04
|
0.19
|
0.02
|
0.13
|
|
Manufacturing
|
0.18
|
0.38
|
0.18
|
0.38
|
0.20
|
0.40
|
0.18
|
0.39
|
|
Construction
|
0.08
|
0.27
|
0.08
|
0.27
|
0.08
|
0.27
|
0.09
|
0.28
|
|
Wholesale and retail trade, transport, accommodation and food service
activities + communication
|
0.30
|
0.46
|
0.30
|
0.46
|
0.31
|
0.46
|
0.39
|
0.49
|
|
Financial, insurance and real estate activities
|
0.03
|
0.18
|
0.03
|
0.18
|
0.04
|
0.19
|
0.02
|
0.15
|
|
Public administration, defence, education, human health and social work
activities
|
0.19
|
0.39
|
0.19
|
0.39
|
0.23
|
0.42
|
0.15
|
0.36
|
|
Other services
|
0.09
|
0.29
|
0.09
|
0.29
|
0.09
|
0.28
|
0.11
|
0.31
|
|
Observations
|
275,034
|
148,022
|
120,705
|
18,362
|
|
Marginal effects
|
Both reform variables
|
Cumulative effect
|
Only EPR reform
|
|
(1)
|
(2)
|
(3)
|
(4)
|
(1)
|
(2)
|
(3)
|
(4)
|
(1)
|
(2)
|
(3)
|
(4)
|
|
EPT liberalisation
(2013m7-2014m7)
|
0.0402***
|
0.0149***
|
0.0154***
|
0.0118**
|
|
|
|
|
|
|
|
|
|
(0.00399)
|
(0.00501)
|
(0.00500)
|
(0.00481)
|
|
|
|
|
|
|
|
|
|
EPR liberalisation
(2014m8-2017m12)
|
0.0836***
|
0.0421***
|
0.0420***
|
0.0321***
|
|
|
|
|
0.0776***
|
0.0320***
|
0.0315***
|
0.0241***
|
|
(0.00242)
|
(0.00547)
|
(0.00546)
|
(0.00525)
|
|
|
|
|
(0.00235)
|
(0.00430)
|
(0.00430)
|
(0.00415)
|
|
Both reforms
(2013m7-2017m12)
|
|
|
|
|
0.0742***
|
0.0246***
|
0.0249***
|
0.0192***
|
|
|
|
|
|
|
|
|
|
(0.00228)
|
(0.00461)
|
(0.00460)
|
(0.00443)
|
|
|
|
|
|
Age: 15-19
(ref.)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20-24
|
-0.243***
|
-0.245***
|
-0.247***
|
-0.242***
|
-0.243***
|
-0.246***
|
-0.248***
|
-0.243***
|
-0.244***
|
-0.245***
|
-0.248***
|
-0.243***
|
|
(0.0166)
|
(0.0165)
|
(0.0167)
|
(0.0178)
|
(0.0166)
|
(0.0166)
|
(0.0168)
|
(0.0178)
|
(0.0165)
|
(0.0165)
|
(0.0167)
|
(0.0178)
|
|
25-29
|
-0.380***
|
-0.383***
|
-0.381***
|
-0.359***
|
-0.380***
|
-0.384***
|
-0.382***
|
-0.361***
|
-0.379***
|
-0.383***
|
-0.381***
|
-0.360***
|
|
(0.0161)
|
(0.0161)
|
(0.0163)
|
(0.0174)
|
(0.0162)
|
(0.0161)
|
(0.0164)
|
(0.0174)
|
(0.0160)
|
(0.0161)
|
(0.0163)
|
(0.0174)
|
|
30-34
|
-0.487***
|
-0.491***
|
-0.488***
|
-0.453***
|
-0.487***
|
-0.492***
|
-0.489***
|
-0.454***
|
-0.486***
|
-0.492***
|
-0.489***
|
-0.454***
|
|
(0.0161)
|
(0.0161)
|
(0.0164)
|
(0.0175)
|
(0.0162)
|
(0.0161)
|
(0.0164)
|
(0.0175)
|
(0.0160)
|
(0.0161)
|
(0.0163)
|
(0.0175)
|
|
35-39
|
-0.537***
|
-0.542***
|
-0.537***
|
-0.495***
|
-0.537***
|
-0.543***
|
-0.538***
|
-0.496***
|
-0.536***
|
-0.542***
|
-0.538***
|
-0.496***
|
|
(0.0161)
|
(0.0161)
|
(0.0163)
|
(0.0175)
|
(0.0162)
|
(0.0161)
|
(0.0164)
|
(0.0175)
|
(0.0160)
|
(0.0161)
|
(0.0163)
|
(0.0175)
|
|
40-44
|
-0.558***
|
-0.563***
|
-0.558***
|
-0.514***
|
-0.558***
|
-0.564***
|
-0.560***
|
-0.515***
|
-0.557***
|
-0.563***
|
-0.559***
|
-0.514***
|
|
(0.0161)
|
(0.0160)
|
(0.0163)
|
(0.0175)
|
(0.0162)
|
(0.0161)
|
(0.0163)
|
(0.0175)
|
(0.0160)
|
(0.0160)
|
(0.0163)
|
(0.0175)
|
|
45-49
|
-0.570***
|
-0.575***
|
-0.571***
|
-0.527***
|
-0.571***
|
-0.576***
|
-0.573***
|
-0.528***
|
-0.569***
|
-0.576***
|
-0.572***
|
-0.528***
|
|
(0.0160)
|
(0.0160)
|
(0.0163)
|
(0.0175)
|
(0.0161)
|
(0.0160)
|
(0.0163)
|
(0.0175)
|
(0.0159)
|
(0.0160)
|
(0.0162)
|
(0.0174)
|
|
50-54
|
-0.585***
|
-0.590***
|
-0.586***
|
-0.540***
|
-0.586***
|
-0.591***
|
-0.587***
|
-0.541***
|
-0.584***
|
-0.590***
|
-0.587***
|
-0.541***
|
|
(0.0160)
|
(0.0160)
|
(0.0162)
|
(0.0174)
|
(0.0161)
|
(0.0160)
|
(0.0163)
|
(0.0175)
|
(0.0159)
|
(0.0160)
|
(0.0162)
|
(0.0174)
|
|
55-59
|
-0.595***
|
-0.600***
|
-0.597***
|
-0.550***
|
-0.596***
|
-0.602***
|
-0.598***
|
-0.551***
|
-0.594***
|
-0.601***
|
-0.598***
|
-0.551***
|
|
(0.0160)
|
(0.0160)
|
(0.0162)
|
(0.0175)
|
(0.0161)
|
(0.0160)
|
(0.0163)
|
(0.0175)
|
(0.0159)
|
(0.0160)
|
(0.0162)
|
(0.0174)
|
|
60-64
|
-0.605***
|
-0.610***
|
-0.607***
|
-0.566***
|
-0.605***
|
-0.612***
|
-0.609***
|
-0.567***
|
-0.604***
|
-0.611***
|
-0.608***
|
-0.567***
|
|
(0.0162)
|
(0.0162)
|
(0.0164)
|
(0.0176)
|
(0.0163)
|
(0.0162)
|
(0.0164)
|
(0.0176)
|
(0.0161)
|
(0.0162)
|
(0.0164)
|
(0.0176)
|
|
Females
|
0.0176***
|
0.0175***
|
0.0190***
|
0.0135***
|
0.0176***
|
0.0175***
|
0.0190***
|
0.0136***
|
0.0176***
|
0.0174***
|
0.0190***
|
|
