PMMA-19985 Analysis of youth underemployment in Macedonia, Montenegro and Serbia
When a worker underuses his/her skills, training and experience, he/she is said to be underemployed. Youth are particularly prone to underemployment, especially on high-unemployment labor markets. The labor markets of Macedonia, Montenegro and Serbia are of this kind. Therein, between ½ and 2/3 of youth possess at least two out of five underemployment conditions: work less than 35 hours and want to work more, temporary contract, job insecurity, salary below the minimum, over-qualification. Still, underemployment is not a topic in the Youth Employment Plans of the three countries, because of lack of evidence and of the crowding-out focus on youth unemployment.
The objective of the proposal is to describe underemployment and investigate its effect on personal well-being in the three countries. Special reference to gender will be made. By so doing, it opts to bring the issue to policymakers’ agenda and formulate ideas for policies tackling underemployment.
Methodologically, we first set underemployment a function of personal and local-labor-market characteristics. We rely on Heckman models – binary- and ordered-outcome ones – to overcome the potential selectivity bias into underemployment. For the ordered case, we use a CMP estimator. We then regress personal welfare on underemployment and worker’s characteristics. As welfare is latent variable, we rely on MIMIC model. To overcome potential endogeneity of underemployment, we specify third regression in the model whereby observables and exogenous instrument determine underemployment. The average local/municipal wage at the time when the person became (under)employed is used as instrument.
The School to Work Transition Surveys (2014-2015) are used.