Relative Labour Market Outcomes of Immigrants in Croatia

Abstract

IntroductionThe main focus of the present paper is on the relative labour market outcomes of immigrant population in Croatia. When discussing migration flows, the focus in Croatia is predominately on the problem of emigration and in particular related to the recent adverse effects of the economic crisis on the local labour market. Consequently, increased negative net migration flows have recently been detected in the official statistical data, although concerns that unofficial emigration is even larger have been raised. Since Croatia joined European Union, questions of potential emigration of Croatian citizens to other member states became increasingly interesting (Vidovic and Mara, 2015). Within this situation, the first impression might be that the pressing need is related to the analysis of the emigration, rather than immigration determinants in Croatia. However, recent migration flows towards all European Union economies, and possible large numbers of immigrants on the Croatian territory, will call for active immigration policy, including the possibility to integrate immigrants on the Croatian labour market. To the best knowledge of the author, this is the first attempt to quantitatively analyse relative position of immigrants on the labour market in Croatia.Croatia is faced with relative unfavourable trends on the labour market, with many population subgroups facing risk of poverty (Government of Croatia, 2014). At the same time, similar to other European Union countries, Croatia is facing demographic aging and potential skills shortages that could adversely affect potential economic growth. Such considerations have been actively discussed in European Union countries, where frequent empirical analysis on the labour market outcomes of immigrant population has resulted in vast literature volumes.Theoretical concepts related to the immigrants' outcomes on the labour markets are connected with over-assimilation and under-assimilation hypothesis, referring to different subgroups of immigrants according to their personal characteristics (Chiswick, 1978; Borjas, 1985). Recent empirical results claim that the immigrants usually belong to the vulnerable sub-groups on the host country labour markets (Bevelander and Irastorza, 2014; Jean et al., 2010; de la Rica, Glitz and Ortega, 2013; Peracchi and Depalo, 2006). Kahanec and Zaiceva (2008) point to the fact that this is relatively widely researched topic in the European Union countries, but indicate that there might be large differences between old and new member states. In the event of immigrants' successful integration, studies indicate that they will positively contribute to net economic and fiscal position of the host country (Algan et al., 2009). Croatia, as the newest EU member state has not been previously included in these empirical estimations. Therefore, we have no prior knowledge on the subject, beyond assuming that the situation in Croatia is similar to other new member countries.In the empirical analysis of the relative labour market outcomes of immigrant versus native population, the most straightforward approach is to include the immigrant status as the explanatory variable in the labour market outcome regression (Kahanec and Zaiceva, 2008; Botric, 2009). Peracchi and Depalo (2006) analyse labour market outcomes in eight old EU members for the cohort of immigrants that migrated before the mid1990s based on European Community Household Panel data. For each labour market outcome they consider models for the pooled data (when immigration is a dummy variable) and separate models for immigrants and natives. They find significant differences between the two population subgroups, especially for the immigrants coming from non EU-15 countries. Interesting fact is that the predictors of each status in each subgroup are similar. They also find that the differences diminish as the length of stay in the country increases, thus emphasising the effect of assimilation hypothesis. …