Making the Transition: Education and Labor Market Entry in Central and Eastern Europe 9780804778954

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making the tr ansition

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Preface

STUDIES IN SOCIAL INEQUALITY

edi tors David B. Grusky s t a n f o r d u n i v e r s i t y Paula England n e w y o r k u n i v e r s i t y

edi tor i a l boa r d Hans-Peter Blossfeld Mary C. Brinton Thomas DiPrete Michael Hout Andrew Walder Mary Waters

m a k i ng t h e t r a n si t ion Educ ation and L abor M arket Entr y in C e nt ral a n d E a st e r n E u rope

Edited by Irena Kogan, Clemens Noelke, and Michael Gebel

sta nford univ ersit y pr ess sta nfor d, califor ni a

Stanford University Press Stanford, California © 2011 by the Board of Trustees of the Leland Stanford Junior University. All rights reserved. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying and recording, or in any information storage or retrieval system without the prior written permission of Stanford University Press. Printed in the United States of America on acid-free, archival-quality paper Library of Congress Cataloging-in-Publication Data Making the transition : education and labor market entry in Central and Eastern Europe / edited by Irena Kogan, Clemens Noelke, and Michael Gebel. pages cm.—(Studies in social inequality) Includes bibliographical references and index. ISBN 978-0-8047-7590-8 (cloth : alk. paper) 1. Labor supply—Effect of education on—Europe, Central. 2. Labor supply— Effect of education on—Europe, Eastern. 3. Youth—Employment— Europe, Central. 4. Youth—Employment—Europe, Eastern. 5. School-to-work transition—Europe, Central. 6. School-to-work transition—Europe, Eastern. I. Kogan, Irena, editor of compilation. II. Noelke, Clemens, editor of compilation. III. Gebel, Michael, 1979- editor of compilation. IV. Series: Studies in social inequality. HD5764.7.A6M35 2011 331.11'4230943—dc22 Typeset by Newgen in 10/14 Sabon

2011015779

con t en ts

List of Tables and Figures ix Contributors xiii Preface xvii ch apter one

Social Transformation and Education Systems in Central and Eastern Europe 1 Clemens Noelke and Walter Müller ch a p t er t wo

The Transition from School to Work in Central and Eastern Europe: Theory and Methodology 29 Michael Gebel and Clemens Noelke chapter three

Hard Times for the Less Educated: Education and Labor Market Entry in East Germany After Reunification 58 Michael Gebel ch a p t er fou r

Education and Labor Market Entry in the Czech Republic Martin Zelenka, Jan Koucký, and Jan Kovarˇovic

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chapter five

Screens and Credentials: Education and Labor Market Entry in Croatia in the Early 2000s 110 Teo Matkovic´

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Contents

ch ap ter six

Delayed Transition: Education and Labor Market Entry in Serbia 141 Irena Kogan chapter seven

Better Times? Education and Labor Market Entry in Slovenia After Socialism 166 Angela Ivancˇicˇ, Miroljub Ignjatovic´, and Maja Škafar ch a p t er eigh t

Education and Labor Market Entry in Transition: The Case of Hungary 189 Erzsébet Bukodi and Péter Róbert chapter nine

Does Horizontal Differentiation Make Any Difference? Heterogeneity of Educational Degrees and Labor Market Entry in Poland 216 Anna Baranowska chapter ten

Education and Labor Market Entry in Estonia: Closing Doors for Those Without Tertiary Education Ellu Saar and Marge Unt chapter eleven

When Higher Education Pays Off: Education and Labor Market Entry in Ukraine 269 Michael Gebel and Irena Kogan c h a p t e r t w e lv e

Institutional Change and the Transition from School to Work in Russia 296 Christoph Bühler and Dirk Konietzka

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Comparative Analysis of Social Transformation, Education Systems, and School-to-Work Transitions in Central and Eastern Europe 320 Irena Kogan, Clemens Noelke, and Michael Gebel Notes

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References 373 Index 401

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l ist of ta bl e s a n d figu r e s

Tables 1.1 1.2 2.1 3.1 3.2 3.3 3.4

3.5 4.1 4.2

4.3 4.4

5.1 5.2

Structural changes and youth unemployment 11 Distribution of educational degrees among recent school leavers 21 Data sources 50 Distribution of education degrees across school leaver cohorts, East Germany 70 Social selectivity of educational attainment (predicted probabilities), East Germany 71 Time until first significant job and occupational status of first significant job, East Germany 74 Occupational status in first job by educational group, most recent education leaver cohorts 2001–2007, East Germany 78 Transition out of first significant job, East Germany 80 Social selectivity of educational attainment (predicted probabilities), Czech Republic 98 Survivor functions of entry into first significant job, most recent education leaver cohorts 2001–2007, Czech Republic 101 Time until first significant job and occupational status of first significant job, Czech Republic 102 Occupational status in first job by educational group, most recent education leaver cohorts 2001–2007, Czech Republic 105 Social selectivity of educational attainment (predicted probabilities), Croatia 123 Time until first significant job, Croatia 126 ix

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5.3 5.4 5.5 6.1 6.2 6.3 6.4 6.5 7.1 7.2

7.3 7.4a 7.4b 8.1

8.2

8.3 8.4 8.5

8.6

9.1 9.2

Tables and Figures

Occupational status in first job by educational group, Croatia 130 Occupational status of first significant job, Croatia 131 Transition out of first significant job, Croatia 134 Social selectivity of educational attainment (predicted probabilities), Serbia 152 Time until first significant job, Serbia 155 Occupational status in first job by educational group, Serbia 158 Occupational status of first significant job, Serbia 159 Transition out of first significant job, Serbia 162 Time until first significant job, Slovenia 178 Occupational status in first job by educational group, most recent educational leaver cohorts 1999–2006, Slovenia 180 Occupational status of first significant job, education leaver cohorts 1999–2006, Slovenia 181 First significant job duration and exit to new employment (1991–2006), Slovenia 184 First significant job duration and exit to unemployment (1991–2006), Slovenia 185 Distribution by levels of education when respondents first left school; and survivor functions of entry into first significant job for those who left school after 1999, Hungary 199 Social selectivity of educational attainment (predicted probabilities), those who left school after 1999 only, Hungary 202 Time until first significant job, Hungary 204 Transition out of first job, Hungary 207 Average log net monthly earnings in respondents’ current jobs and occupational class distribution by education, only those who left school after 1999, Hungary 211 Determinants of log net monthly earnings in respondents’ current jobs, only those who left school after 1999, Hungary 212 Social selectivity of educational attainment (predicted probabilities), Poland 226 Time until first significant job, Poland 229

Tables and Figures

9.3 9.4 9.5 10.1 10.2 10.3 10.4 10.5 11.1 11.2 11.3 11.4 11.5 12.1 12.2 12.3 13.1

13.2

13.3

Occupational status in first job by educational group, Poland 232 Occupational status of first significant job, Poland 233 Determinants of first significant job duration, Poland 236 Social selectivity of educational attainment (predicted probabilities), Estonia 252 Time until first significant job, Estonia 256 Occupational status in first job by educational group and education leaver cohorts, Estonia 259 Occupational status of first significant job, Estonia 261 Transition out of first significant job, Estonia 264 Social selectivity of educational attainment (predicted probabilities), Ukraine 281 Time until first significant job, Ukraine 284 Occupational status in first job by educational group, Ukraine 287 Occupational status of first significant job, Ukraine 289 Transition out of first significant job, Ukraine 291 Level of education by school leaver cohorts, Russia 307 Time until first significant job, Russia 311 Determinants of first occupational position (results of the multinomial logit regression), Russia 314 Relative performance of different groups of secondary graduates compared to upper secondary vocational graduates, in terms of entry to and occupational status of first job 330 Advantages and disadvantages of lower vocational graduates compared to lower and upper secondary graduates in terms of entry speed to and occupational status of the first job 333 Relative performance of different groups of postsecondary graduates compared to upper secondary vocational graduates in terms of entry speed to and occupational status of first job 339

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Tables and Figures

Figures 3.1

5.1 6.1 7.1 9.1 10.1 11.1 12.1 13.1

13.2

13.3

13.4

Survivor functions of entry into first significant job, most recent education leaver cohorts 2001–2007, East Germany 72 Survivor functions of entry into first significant job by broad education group, Croatia 125 Survivor functions of entry into first significant job, Serbia 154 Survivor functions of entry into first significant job, education leaver cohorts 1991–2006, Slovenia 176 Survivor functions of the entry into first significant job, Poland 228 Survivor functions of entry into first significant job, education leaver cohorts 1997–2003, Estonia 254 Survivor functions of entry into first significant job, Ukraine 283 Survivor functions of entry into first significant job, by school leaver cohort and education, Russia 309 Evolution of education effects on entry speed to and occupational status of first job for cohorts entering employment under socialism and capitalism, Czech Republic, Estonia, and Russia 324 Overall size of post-secondary education sector and relative performance of higher tertiary graduates compared to lower tertiary graduates (including post-secondary vocational tracks) in terms of entry speed to and occupational status of first significant job 342 Relative size of higher tertiary programs and relative performance of higher tertiary graduates compared to lower tertiary graduates (including post-secondary vocational tracks) in terms of entry speed to and occupational status of first significant job 342 Employment growth in the service sector and relative performance of higher tertiary graduates compared to upper vocational graduates in terms of entry speed to and occupational status of first significant job 343

con t r ibu tors

Anna Baranowska is a researcher at the Institute of Statistics and Demography in the Warsaw School of Economics in Poland. Her research interests cover transitions to adulthood, in particular the transition from school to work; the transition to residential independence; partnership; and parenthood. Christoph Bühler is professor for methods of social research at the Institute of Sociology of the Leibniz University, Hannover. He is involved in two large-scale data collection projects: the European Gender and Generations Survey, which also covers many countries in Central and Eastern Europe, and the Education and Employment History Survey in Russia. He has published on youth labor market integration in Russia as well as on fertility dynamics and the role of social capital in Eastern Europe. His publications have appeared in European Societies and Demographic Research, among others. Erzsébet Bukodi is a research fellow at the Institute of Education, University of London, U.K. Previously she was a Max Weber Post-Doctoral Fellow at the European University Institute, Florence; worked as a senior researcher in the Department of Sociology, University of Bamberg, Germany; and was head of the Social Stratification section in the Department of Social Statistics of the Hungarian Central Statistical Office, Budapest. Her research interests involve educational inequalities, trends in intergenerational and intragenerational mobility, different aspects of life-course analysis, and gender differences in the labor market, as well as the relationship between social and cultural stratification. Michael Gebel is assistant lecturer at the Chair of Sociology, Societal Comparison, at the University of Mannheim, Germany. His main research interests include the sociology of education and labor market sociology, especially the dynamics of school-to-work transition, youth unemployment and atypical employment, and international comparative social research. His newest publications on youths’ labor

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market integration appeared in Work, Employment & Society, European Societies, and European Sociological Review. Miroljub Ignjatovic´ is a researcher and assistant professor at the Faculty for Social Sciences, University of Ljubljana, Slovenia. His research topics are the labor market (employment, unemployment, flexibilization), vocational education and training, social policy, and post-modern society. He is author and co-author of several articles and chapters in monographs. Angela Ivancˇicˇ is a researcher at the Slovenian Institute for Adult Education in Ljubljana and a lecturer at the Faculty for Social Sciences, University of Ljubljana, Slovenia. She completed her PhD at the Faculty for Social Sciences, University of Ljubljana. Her main research interests focus on adult education systems and participation, workplace learning, qualification systems, and individual labor market careers. Her article “Education and Shifts between Labour-Market States in the Transition from the Socialist to the Market Economy” has been published in European Sociological Review. Irena Kogan is professor of comparative sociology at the University of Mannheim, Germany. Her research interests include ethnicity and migration, structural assimilation of immigrants, social stratification and mobility, and transition from school to work. She is the author of a number of articles in international journals dealing with immigrants’ labor market integration and social stratification. Her recent book publications include a monograph, Working through barriers: Host country institutions and immigrant labour market performance in Europe (Dordrecht, Netherlands: Springer, 2007) and an edited volume, together with Michael Gebel and Clemens Noelke, Europe enlarged: A handbook of education, labour and welfare regimes in Central and Eastern Europe (Bristol, UK: Policy Press, 2008). Dirk Konietzka is professor of sociology at Braunschweig Institute of Technology, Germany. His main research interests are life-course research, social stratification, and demographic research. He has published widely on these topics, specifically on youth labor market integration and fertility and family formation in Eastern and Western Germany. His publications have appeared in Work, Employment & Society and European Sociological Review, among others. Jan Koucký is director of the Education Policy Centre at the Charles University in Prague, Czech Republic. He is engaged in the multinational REFLEX project on higher education graduates in the labor market. His research interests and publications cover comparison of education systems in OECD countries; access to tertiary education; and education, skill, and labor market research, as well as policy analysis and political consulting.

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Jan Kovarˇovic is a researcher at the Policy Education Centre at the Charles University in Prague, Czech Republic. His research interests and publications cover educational infrastructure, education policy, and the transformation of education systems. Teo Matkovic´ is a junior lecturer at the Social Policy Chair of the Faculty of Law, University of Zagreb, and research associate in the project “Social Cohesion Indicators and Development of Croatian Social Model.” His research interests focus on inequalities and policies in spheres of unemployment, employment, and education. His PhD thesis deals with school-to-work transitions in Croatia. Walter Müller is professor emeritus of sociology at the University of Mannheim, Germany. He was chairperson of the European Consortium for Sociological Research (ECSR), co-founder and later director of the Mannheim Centre for European Social Research (MZES). He has published extensively in the areas of social stratification and labor market development, in particular on social inequality in educational participation and attainment, the role of education for job allocation and social mobility, the development of self-employment in advanced economies, and class cleavages in political party preferences. His latest books include The Reemergence of Self-Employment: A Comparative Study of Self-Employment Dynamics and Social Inequality, edited with Richard Arum (Princeton University Press, 2004), and Transitions from Education to Work in Europe, edited with Markus Gangl (Oxford University Press, 2003). Clemens Noelke is post-doctoral research fellow at the Mannheim Centre for European Social Research in Germany and visiting scholar at the Department of Sociology at Harvard University. His scientific interests are in the areas of historical and comparative stratification research, sociology of education and labor markets, and quantitative methods. His PhD thesis analyzes the consequences of employment protection legislation for job insecurity on youth labor markets. Péter Róbert is a full professor at the Faculty of Economics, Szechenyi Istvan University, Gyor, Hungary. He is also a senior researcher at the Institute for Political Science, HAS. His research interests include social stratification and mobility with a special focus on educational inequalities and life-course analysis. He also does research on lifestyle differentiation and on attitudes toward social inequalities. Recent publications examine career differences of married couples, the educational transition from secondary to tertiary school, a comparison of students’ performance in state-owned and church-run schools, and early careers of young graduates. Ellu Saar is professor at the Institute of International and Social Studies, Tallinn University, Estonia. She is now coordinating the EU Sixth Framework Programme

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“Towards a Lifelong Learning Society in Europe: The Contribution of the Education System.” She has published articles about social stratification and mobility, transitions in youth, and social justice beliefs in European Sociological Review, European Societies, International Sociology, Europe-Asia Studies, Nationalities Papers, and others. Maja Škafar graduated in communication science at the Faculty for Social Sciences, University of Ljubljana, Slovenia. She works as a methodologist and statistical analyst, especially in the fields of social science and ecology. She is co-author of several papers, the most important of which relate to the recruitment of young people for research and development activity and to sustainable development strategy. The most recent paper was published in Sociologia y tecnociencia. Marge Unt is a senior researcher at the Institute of International and Social Studies, Tallinn University, Estonia. She is currently leading the European Science Foundation–funded project “Labour Market Returns to Higher Education.” Her research interests lie in social stratification, transitions in youth, methods of data analysis, labor markets, and occupations and careers from a comparative perspective. In her dissertation, she focused on labor market entry and early careers in enlarged Europe. Martin Zelenka is a researcher at the Education Policy Centre at the Charles University in Prague, Czech Republic. His main research interests include analysis of the transition from education to work. He participated in the Czech school leaver survey titled “School to Work Transition of Graduates and Skill Requirements” and is author and co-author of several publications concerning the situation of graduates in the labor market in the Czech Republic.

p r e fac e

This book summarizes the results of a large-scale, international research project on the consequences of social transformation in Central and Eastern Europe for young people’s transition from school to work. We brought together researchers from Eastern and Western Europe to analyze how young people have been affected by the momentous historic events unfolding after 1989 and how they fare on labor markets today. The project has been generously financed by the Volkswagen Foundation under the funding initiative “Unity Amidst Variety? Intellectual Foundations and Requirements for an Enlarged Europe” and has involved, at different stages, altogether twentyone researchers from Central and Eastern Europe. Bringing together experience and expertise from across the region, the project has provided a glimpse of the diversity among post-socialist countries that sometimes eludes Western observers. It has been a great collective learning process and opportunity for exchange for everyone involved. A workshop in Mannheim, Germany, in June 2006 marked the beginning and laid the groundwork for a first book documenting the enormous heterogeneity in education systems, labor markets, and welfare regimes across Central and Eastern Europe (Kogan, Gebel, and Noelke 2008). In November 2007, we proceeded with an in-depth analysis of longitudinal data on labor market entrants in ten Central and Eastern European countries, comparing young people’s outcomes over time and countries. The results of this project phase are summarized in this volume. We follow the tradition of historical-comparative stratification research as it has been carried out within the Research Committee on Social Stratification and Mobility (RC28) of the International Sociological Association (Shavit and Blossfeld 1993; Shavit and Müller 1998; Breen 2004; xvii

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Arum and Müller 2004; Arum, Gamoran, and Shavit 2007). So far, there has been virtually no comparative research that addresses the consequences of transformation for education systems and labor market integration of young people in post-socialist Central and Eastern European countries. With this volume, we have tried to fill this research gap, but we also tried to extend existing research on the school-to-work transition (e.g., Blossfeld et  al. 2008; Müller and Gangl 2003; Müller and Shavit 1998) not only geographically, but also conceptually and in terms of research design. We hope that this book can make a contribution to theory-driven, comparative research on social stratification in transformation societies and that it may serve as a reference for future research in this field. The unique transformation experience of post-socialist countries offers an exceptional opportunity to assess the effects of institutions and institutional change on patterns of social stratification. Our analyses focus in particular on changes in the education system triggered by the transformation from socialism to capitalism and their consequences for educational attainment and labor market integration. In Chapter 1, we survey the countries covered in this volume, outline their transformation experiences and differences in their education systems, and discuss the impact of system change on the transition from school to work. Chapter 2 analyzes in greater detail the relationship between educational institutions, educational attainment, and the transition from school to work, and surveys the methodology underlying the chapters published in this volume. Chapters 3 to 12 comprise in-depth analyses of specific countries, revealing the heterogeneity of transformation experiences and outcomes. Chapter 13 presents results of some additional comparative analyses, and summarizes and discusses the key results of this volume. A project of this magnitude would not have been possible without great support from a number of people. We thank the Volkswagen Foundation for generous support, as well as all members of the project for their enthusiasm and persistence. The project has been hosted by the Mannheim Centre for European Social Research (MZES) at the University of Mannheim. The MZES has provided a stimulating environment and excellent scientific infrastructure. It has also generously hosted research stays of visiting scholars for extended periods. We are grateful for having had the opportunity to collaborate closely with excellent researchers from across CEE countries and

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hope that our cooperation will not stop with this volume, but will translate into new research ideas and projects. At the MZES, we also benefited from the excellent scientific support of our student assistants, Stefanie Heyne and Frédéric Turri. In addition, we are thankful for the editorial assistance of Ben Davidson and Rachel Heidmann. Finally, we are particularly grateful to Stanford University Press, especially to Kate Wahl, Joa Suorez, and Jay Harward for overseeing the manuscript from first draft to publication, and to the reviewers for very helpful comments. Irena Kogan Clemens Noelke Michael Gebel Mannheim, July 2011

making the tr ansition

chapter one

Social Transformation and Education Systems in Central and Eastern Europe Clemens Noelke and Walter Müller

i n t roduc t ion Social transformation in Central and Eastern Europe (CEE)1 has been a singular process in modern history (Elster, Offe, and Preuss 1998; Kornai 2006). Within a few years after 1989, democratic governments and capitalist markets replaced dictatorial communist parties and planning bureaucracies as central mechanisms of political and economic coordination. Across the region, reforms introducing a market economy were implemented, freeing up prices, liberalizing trade, and privatizing state-owned enterprises. Markets for capital, goods, and labor developed and gradually became integrated into the European and global economy. For a number of post-socialist CEE countries, this process culminated in accession to the European Union (EU) in the new millennium. While transformation from socialism to capitalism and democracy has expanded civic liberties and political freedom in most CEE countries, initial hopes of rapid economic convergence to Western standards have been largely disappointed. The demise of the socialist state and the emergent capitalist order put an end to former guarantees of lifetime employment and basic economic security. In the early years of transformation, aggregate output, employment, and real incomes plummeted, while unemployment, poverty, and inequality soared. Economic turmoil was accompanied by demographic crisis. Fertility rates dropped, while divorce, morbidity, and suicide rates rose. Nevertheless, until the region was hit by the 2008–2009 economic and financial crisis, most CEE countries had been growing at rates sometimes far above the Western European average. 1

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Because of this fundamental, pervasive, and rapid social transformation, system change in CEE has provoked much research and debate among social scientists. A central concern in the literature has been to link changing economic institutions (i.e., the rise of markets) to changing patterns of social inequality (Nee 1989; Rona-Tas 1994; Walder 2003; Heyns 2005; Diewald, Goedicke, and Mayer 2006; Verhoeven, Dessens, and Jansen 2008). By studying market societies in the making, we have the rare opportunity to obtain fundamental insights about how institutions and markets interact to shape individuals’ life courses and determine overall patterns of social inequality. In this volume, we study the impact of social transformation on young people and their transition from school to work in ten CEE countries. The transition from school to work is commonly understood as the process of entering a stable job after an individual’s primary involvement in education has been completed (Müller and Gangl 2003). Public and scientific interest in this issue has grown in response to increasing and persisting difficulties in youth labor markets in a number of Western countries. Entering the workforce has become a prolonged, more turbulent, and more precarious process, at least when compared to the smooth transition from full-time education to lifetime employment in the 1950s and 1960s (Ryan 2001). Structural change, globalization, educational expansion, and flexibilization of labor markets have left their marks on young people entering the workforce. Research has shown that the difficulties experienced at this lifecourse transition, as well as the inequalities that emerge at this point, persist well beyond this initial phase and throughout working life (Kerckhoff 2001; Ryan 2001; Müller 2003; Müller and Gangl 2003). Hence, social scientists and policy makers alike are interested in finding solutions to the challenges of harnessing the potential of young people in aging societies and preparing them for a long, productive labor market career. Among the factors discussed, education is of crucial importance. In the course of social transformation in CEE countries, the transition from school to work gained importance in people’s lives. Access to employment had been more or less guaranteed under socialism, which considerably diminished the risks and uncertainties now associated with this transition under capitalism. The end of socialism freed young people from coercive state institutions, but the subsequent economic contraction made their social and economic positions precarious. While young people could take

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advantage of new educational opportunities, particularly in tertiary education, they suffered disproportionately from rising unemployment. Youth unemployment has persisted at an extremely high level in a number of CEE countries since the turbulent early 1990s, with societal repercussions beyond the labor market problems of immediately affected young people. As of 2010, virtually no larger-scale comparative research has addressed the transition from school to work in socialist and post-socialist CEE.2 Both in Eastern and Western Europe, young people have been affected by economic restructuring, educational expansion and economic deregulation, flexibilization, and globalization, providing scholars with the opportunity to understand how institutions and markets shape this life-course transition. The aim of this volume is to study how transformation has altered the transition from school to work and to portray the youth labor market in CEE countries in the early 2000s. We ask precisely how the transition from school to work has been affected, and what role the education system has played in this regard. What new risks and opportunities have emerged for young people in CEE countries, and how are these risks and opportunities distributed across education groups? How does the process of labor market entry function? Are the patterns similar to what we observe in Western countries or have they evolved in ways specific to CEE countries? Given a disadvantaged heritage from socialism, can education systems prepare young people for successful labor market entries? To answer these questions, we pursue two main avenues of analysis. First, we study how the transition from school to work has changed across several cohorts of youth entering employment under socialism, during the turbulent transformation years, and in the early 2000s. Then we conduct detailed analyses of labor market entry for the most recent cohorts entering the labor market to pinpoint the underlying mechanisms that lead to advantages or disadvantages. By studying both changes over time and current conditions, we can learn about the long-term impact of socialism and transformation on problems young people face in entering the labor market. The chapters in this volume study the transition from school to work in ten CEE countries, which represent the diverse starting conditions, transformation trajectories, and institutions observed in the region. Among the countries emerging from the Soviet Union, we focus on Estonia, Ukraine, and Russia. Despite a shared heritage, these countries underwent very different developments after 1991. We also study three countries emerging

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from the Socialist Federal Republic of Yugoslavia (SFRY), which also have experienced different transformation outcomes: Slovenia, Serbia, and Croatia. Finally, we study four countries in Central Europe, 3 which were among the most developed socialist economies in 1989: East Germany, Poland, the Czech Republic, and Hungary. We try to identify common consequences of system transformation while remaining sensitive to the implications of particular conditions prevailing during transformation in different countries. Chapter 1 provides a general overview of core features of the transformation process in the countries in our study. Following the introduction, the second section of this chapter, “Social Transformation and the Role of Education,” develops our main analytical approach in relation to previous work on transformation- and education-related inequalities. In the third section, “The Transformation from Socialism to Capitalism,” we describe the countries in more detail, focusing on their diverse transformation experiences, key institutional differences, and macroeconomic developments. The fourth section, “Education Systems in Central and Eastern Europe,” surveys education systems in the CEE countries studied, both before and after transformation. The fifth section, “The Transition from School to Work Under Socialism,” briefly portrays the school-to-work transition under socialism, while the final section, “The Impact of Social Transformation on the Transition from School to Work,” provides an outlook on the main questions and analyses to follow in this volume.

so c i a l t r a n sf or m at ion a n d t h e rol e of e duc at ion The transformation from socialism to capitalism represents a fundamental change in institutional conditions in CEE countries, and therefore provides a unique opportunity to analyze how institutions structure individual life courses (Mayer 2004, 2006). Since hardly any aspect of economic, social, and political life was not affected, disentangling the exact mechanisms through which this transformation has affected individuals presents a challenge for social research. The analyses in this volume reduce the inherent complexity of transformation by restricting the analytical focus to young people making a specific but crucial life-course transition. To explain the phenomenon we study, we focus on the extent of market reforms, the structure of the education system inherited from socialism, and changes in the

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5

education system induced by transformation. We also consider the political economy of on-the-job training and changing labor demand. These macrolevel phenomena alter individual behavior by changing the constraints on individual decision making. By linking macro-level phenomena to microlevel models of individual behavior, we attempt to unravel the complex ways in which transformation has an impact on individual life courses, and to show how historic, institutional, and structural changes intertwine to shape the transition from school to work. In capitalist economies, individual educational attainment is generally regarded as the key determinant of labor market outcomes. Employers hire, dismiss, and remunerate workers according to their education because it is assumed to be correlated with individual productivity (Becker 1964; Spence 1973). Both human capital and signaling theories about the relationship between education and earnings are based on this assumption. It is sometimes left implicit, however, that competitive markets provide the incentives for employers to behave in this manner. The opportunity or necessity to operate businesses profitably provides an incentive for the efficiency-oriented behavior of employers, which among other things entails that they try to attract the most able and productive employees and pay them according to their skills or productivity (Becker 1964). In contrast, Kornai’s analyses of socialist economies have shown that the incentive of firms to maximize profits and minimize costs was curbed by “soft budget constraints” (Kornai 1980, 1992; Kornai, Maskin, and Roland 2003). Enterprises were shielded from domestic and foreign competition and tended to hoard production inputs, including labor, to achieve plan targets, which created persistent scarcities. Scarcities in turn increased the tendency to hoard inputs. While economic planners tried to create incentives for efficient firm behavior, even chronically loss-making enterprises continued to have access to credit and could rely on being bailed out by the state. In consequence, incentives for efficient behavior were weakened; and the economic necessity to hire, remunerate, or promote workers on the basis of their productivity diminished. Instead, governments enforced socialist wage grids that dampened wage inequality between different skill groups, sometimes raising rewards for manual jobs above those of more skill-intensive non-manual jobs (Atkinson and Micklewright 1992). By removing politically enforced wage norms and raising incentives for efficient production, we should expect transformation to lead to a stronger

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correlation between educational qualifications, as measures of skills or productivity, and labor market outcomes. Drawing on Szelenyi’s (1978) analysis of the allocation of economic rewards under socialism,4 Nee (1989) advances the claim that the more economic coordination is based on market principles, the stronger the relationship between skills or human capital (measured by education) and economic rewards will be. 5 In the course of transformation in CEE countries, the power to decide whom to hire and dismiss and how to promote and remunerate workers was transferred to employers in private enterprises. Their behavior was increasingly constrained by the competitive pressures of capitalism. As markets are more effectively implemented, efficiency and profit-maximizing considerations cause employers to increasingly rely on individual education as an indicator of productivity when making personnel decisions. While Nee’s (1989) original work focused on agricultural reform in rural China, we now have considerable evidence that the correlation between education and earnings has been growing in a number of post-socialist CEE countries (Svejnar 1999; Fleisher, Sabirianova, and Xiaojun 2005; see Flabbi, Paternostro, and Tiongson 2008 and Verhoeven, Dessens, and Jansen 2008 for multicountry comparisons); for example, Russia (Brainerd 1998; Gorodnichenko and Sabirianova 2005), Hungary (Campos and Joliffe 2007), the Czech Republic (Munich, Svejnar, and Terrell 2005), and Poland (Newell and Socha 2007). While there is a lot of evidence on the changing relationship between education and earnings or income, it is less clear whether this applies to all demographic groups equally and whether it can be generalized to other outcomes, especially in regard to the transition from school to work, the speed of finding a first significant job, and its stability and socioeconomic status. From a life-course perspective, it appears more plausible that transformation has had heterogeneous impacts on individuals at different stages in their lives. In this volume, we especially focus on the changing role of education at the individual’s entry into working life and study its impact on the speed of finding employment as well as the quality and stability of first significant jobs. As widely emphasized (Walder 1996; Heyns 2005; Mayer 2006), transformation should not be conceptualized as a linear process with identical starting and ending points. Origin and destination states as well as the speed, scope, and outcomes of transformation differ substantially across countries and have implications for the role of education on the labor market.

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7

All countries made substantial efforts to introduce markets starting in 1989, or even earlier, but the extent and kind of market reform and the emerging kind of coordination of economic actors differed. A key hypothesis for our analysis therefore relates to the relative success of market reforms and educational inequalities: If the regulatory framework on which market competition rests is not effectively implemented, we should observe a weaker correlation between education and labor market outcomes. This would result from weaker incentives for competitive behavior. Apart from the success of market reforms, the question also remains about which kinds of market economies are emerging in different countries (Walder 1996, 1068). Concerning the coordination of economic actors, we refer to the distinction between liberal and coordinated market economies (Estevez-Abe, Iversen, and Soskice 2001; Hall and Soskice 2001). Research on Western countries suggests that “coordinated market economies,” such as Germany or Austria, succeed in operating large-scale vocational education programs, where employers sponsor substantial amounts of on-the-job training. These education programs not only supply globally competitive manufacturing industries with skilled workers (Hall and Soskice 2001), but also facilitate labor market entry for young people (Ryan 2001; Breen 2005). Given that socialist education systems were strongly oriented toward vocational education and industrial production, it is crucial to understand if CEE countries could transform their socialist heritage into an asset, or whether it has become a liability. The next section briefly surveys the diverse transformation patterns seen in CEE countries and also addresses the political economy of vocational education in more detail.

t h e t r a n sf or m at ion f rom so c i a l i sm t o c a p i ta l i sm Most CEE countries experienced a rapid transformation from socialism to capitalism and democracy. System change in the economy implied privatization of enterprises and liberalization of prices and trade. As markets began to function and governments started to refrain from bailing out loss-making enterprises, many employers were forced to cut costs, close, or were broken up, leading to drastic job losses and declines in economic output. Although all CEE countries introduced liberal market reforms, they exhibit a remarkable diversity in approaches to economic reform and emergent institutional

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configurations (Bohle and Greskovits 2007; King 2007; Lane and Myant 2007; Gebel 2008), which are important to understanding the relationships between the economy, the education system, and labor market entry. Transformation Pathways and Institutional Configurations The Estonian case is often used as an example of the rapid implementation of a classical liberal economic policy regime focused on macroeconomic stability (Feldmann 2006; Bohle and Greskovits 2007; Buchen 2007; Feldmann 2007; Saar and Lindemann 2008). Part of the former Soviet Union, Estonia achieved independence in 1991 and had to overcome a comparatively disadvantaged heritage. The environment created by liberal economic reform has proven adverse for the development of powerful industrial relations regimes. While income inequality is high, gross domestic product (GDP) growth rates were among the highest in the EU in the early 2000s (Noelke 2008). The SFRY was the only country in the Eastern Bloc somewhat independent from the Soviet Union; it had developed its own brand of socialism, which relied to a greater extent than other socialist countries on market-based coordination and worker-management cooperation. It was also the only post-socialist CEE country with established trade ties to the West, which added to its level of technological development and competitiveness. Among the countries emerging from the SFRY, only Slovenia has been able to thrive on this heritage. Croatia and Serbia, while sharing a common institutional heritage with Slovenia under the SFRY, were economically less developed. Their economic disadvantages were compounded by illiberal political movements and ethnic strife, which led to civil war and international isolation. In consequence, their economy strongly declined in the early 1990s, and institutional reform and economic restructuring were delayed. Later political and economic reforms allowed both countries to experience rapid economic growth in the early 2000s (OECD 2008a). Slovenia has undertaken a coordinated and regulated approach to market reform (Feldmann 2006; Buchen 2007; Feldmann 2007; Ivancˇicˇ 2008). With stable democratic institutions, relatively low inequality, and consistently high growth rates, Slovenia has often been singled out as a post-socialist success story. Cooperative relations between strong trade unions and employer organizations shaped transformation politics and

Social Transformation in Central and Eastern Europe

9

facilitated the development of an effective tripartite industrial relations regime. Corporate actors succeeded in coordinating and regulating the transition to capitalism, averting some of the adverse outcomes of rapid economic reform witnessed in other countries. Privatization proceeded slowly, with frequent insider buyouts by employees and managers. Slovenia may be considered an outlier, though, since we do not observe a similarly coordinated transformation process in any other CEE country. East Germany represents a unique compromise of rapid economic liberalization and simultaneous adoption of an elaborate institutional framework regulating markets (Goedicke 2006; Hunt 2008). With the reunification treaty, the German Democratic Republic (GDR) formally acceded to the constitutional territory of the Federal Republic of Germany (FRG), thereby joining the capitalist economic regime of the FRG and adopting its institutions. Compared to other CEE countries, East Germany gained unique resources: Reunification and the transfer of institutions greatly facilitated the quick emergence of a functioning legal infrastructure. Reunification also provided access to substantial public and private capital. While East Germany was already among the most developed socialist countries, reunification contributed to rapid economic restructuring and increasing living standards. However, the East German labor market has been slow to recover from the transformation crisis. Moreover, the structural crisis of the East German economy has shaped the implementation of West German institutions. Membership in employer organizations and trade unions never reached West German levels. Compared to Slovenia and East Germany, Poland, the Czech Republic, and Hungary have developed powerless tripartite institutions (Ost 2000; Bohle and Greskovits 2007; Baranowska 2008; Bukodi and Róbert 2008). Despite a liberal reform approach and a strained state budget, state policy makers attempted to cushion the impact of transformation on individuals through more generous welfare spending (Vanhuysse 2007). A key factor contributing to development in the region has been fast reindustrialization. While Poland, the Czech Republic, and Hungary had been among the most technologically advanced socialist CEE countries, they were also more successful than the Baltic countries and Slovenia in attracting foreign investors, which provided capital and technology to modernize industrial production. The share of complex exports like cars and machines has consistently increased in the course of transformation (Bohle and Greskovits 2007).

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Russia and Ukraine differ from the other countries studied here because of their disadvantaged heritage combined with a problematic transformation. They experienced socialism longer than all other countries analyzed here. Furthermore, while privatization in Central European countries proceeded in a relatively regulated manner, it was more loosely regulated in Russia, Ukraine (Walder 2003), and also Serbia (King 2007). This provided old political and technocratic elites with better opportunities to capture valuable productive resources than in other CEE countries, resulting in asset stripping and capital flight.6 A weak legal infrastructure to enforce creditor or tax claims, the emergence of oligopolies or monopolies, and the survival of nonmarket-based means of economic exchange (e.g., networks, cronyism) have dampened market discipline and provided disincentives for long-term investments. Economic contraction led to the hollowing out of large sectors of the economy, especially manufacturing, thus diminishing conventional economic opportunities for many people. Instead, the dominant economic goal of elites and individuals seemed to be short-term gain, or simply surviving with whatever means and resources were available (Gerber and Hout 1998). Burawoy and Krotov (1992) characterized the emerging economic order as “merchant capitalism,” wherein trade and short-term profit rather than investment and efficient production, as well as barter and other forms of nonmarket exchange, have dominated economic activity. Nevertheless, economic growth rebounded in the early 2000s in Russia and Ukraine after a long and deep economic crisis during the 1990s (see Table 1.1). In summary: In the 1990s, we observed extensive reform efforts in the Czech Republic, East Germany, Estonia, Hungary, Poland, and Slovenia, which were further consolidated on the road to EU membership. Market reform was delayed by civil war in Croatia and Serbia. In contrast to the Central European and Baltic countries en route to EU membership, Russia and Ukraine had a weak legal infrastructure to enforce market competition and survival of nonmarket-based means of economic exchange. This dampened market discipline, incentives for entrepreneurial activity, and capital investment, and consequently dampened the growth of inequalities in labor market outcomes between education groups (Burawoy and Krotov 1992; Gerber and Hout 1998; King 2007). The cohort analyses in the country studies as well as the concluding chapter in this volume assess empirically whether the varied success of market reforms explains variation in educational returns on the labor market across countries and time.

–3.1 –2.6 –3.2 –1.4 –8.4 –15.1 –2.7 –8.9 –8.8 –12.3 –6.7 1.8

1.5 2.1 3.3 6.0 4.0 1.6 4.4 5.2 –1.0 –5.5 2.2 3.6

0.4 3.2 4.5 3.2 4.3 5.3 3.7 8.0 6.8 8.4 4.8 2.7

1.9 5.6 2.4 5.4 4.2 6.0 5.1 5.6 6.9 4.9 4.8 2.5

10.0 7.7 19.7 25.5 19.9 n.a. 10.7 21.2 13.9 43.5 19.1 8.7

2.6 3.6 4.7 14.7 12.8 20.8 10.3 4.7 9.0 16.7 10.0 4.4

2005– 08 1989* 2007

services

youth

45.0 42.9 37.2 38.3 29.1 n.a. 44.1 37.2 40.3 21.4 37.3 31.5

26.7 40.2 32.6 30.7 30.7 29.5 34.5 35.2 29.2 23.9 31.3 25.1

45.0 49.3 43.1 36.3 51.0 n.a. 45.1 41.6 45.7 35.1 43.6 59.8

70.7 56.2 62.7 54.6 56.5 49.7 55.2 60.1 61.8 59.4 58.7 70.5

12.8 6.5 18.8 27.8 40.2 n.a. 27.4 13.4 16.3 n.a. 20.4 16.5

17.4 10.7 18.0 21.7 24.0 43.7 10.1 10.0 14.5 14.9 18.5 15.0

youth/adult

10.8 2.7 8.5 11.2 6.6 n.a. 5.1 8.7 3.9 n.a. 7.2 7.1

15.0 4.8 6.5 8.1 7.9 15.5 4.2 4.0 4.9 6.0 7.7 5.1

1.2 2.5 2.2 2.5 6.1 n.a. 5.4 1.5 4.2 n.a. 3.2 2.4

1.2 2.2 2.8 2.7 3.0 2.8 2.4 2.5 3.0 2.5 2.5 3.0

1992+ 2007§ 1992+ 2007§

adult

unemployment rates (%)

1989* 2007 1989* 2007 1992+ 2007§

industry

sectoral employment rates (%) agriculture

s o u r c e s : GDP growth rates from EBRD (2009b); data for East Germany from Hunt (2008) for the years 1990–2004, and Statistisches Landesamt Baden-Württemberg (2009) for the years 2005–08, growth rates for East Germany include Berlin; data for the Czech Republic from EBRD (2000) for the years 1990–96 and EBRD (2009a) for the years 1997–2008; data for EU15 from OECD (2010). Sectoral employment rates from ILO (2009). Unemployment rates from ILO (2009). n o t e s : n.a. – not available. Youth: ages 15–24. Adult: ages 25+, 25–65 in case of East Germany. The CEE average youth/adult unemployment rate ratios are calculated as the column averages of the country-specific ratios listed in the table. *Data for Czech Republic from 1993, Croatia from 1996, Slovenia from 1993, Russia from 1990. +Data for the Czech Republic is average of 1991 and 1993, Croatia from 1991, East Germany from 1991, Slovenia average of 1991 and 1993, Estonia from 1993. §Data for Ukraine from 2005.

East Germany Czech Republic Hungary Poland Croatia Serbia Slovenia Estonia Russia Ukraine CEE average EU15 average

1990–94 1995–99 2000– 04

average real gdp growth (%)

ta bl e 1.1 Structural changes and youth unemployment

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As to the coordination of economic actors: Across CEE countries, liberal economic reforms appear to have generated a hostile environment for the development of institutions of nonmarket economic coordination. The labor movement and trade unions were weakened, and the formally established tripartite corporatist bodies have remained essentially powerless. With the exception of Slovenia and East Germany, there are few indications that effective corporatist industrial-relations regimes have developed that wield comparable influence to their counterparts found in some Western countries (Ost 2000; Bohle and Greskovits 2007; Gebel 2008). With the noted exceptions, economic reforms seem to have created a tendency toward a liberal economic regime, relying mainly on markets or states for economic coordination, with weak influence of corporate actors. This is relevant to the development of vocational education and training. The political economy literature suggests that successful, large-scale vocational education programs, especially the provision of employer-sponsored on-the-job training, are usually embedded in and sustained by an extensive institutional framework as well as state support typical of coordinated market economies (Hall and Soskice 2001; Culpepper and Thelen 2008). Given weak corporate actors in most CEE countries, economic crisis, and the transfer of training decisions from states to employers, we saw substantial declines in training provision during the 1990s. This decline may have put vocational education in these countries at risk and potentially limited the supply of skilled workers. Most important, the transition from school to work for vocational graduates, which still represents a large group in a number of CEE countries, may have become increasingly problematic. At the same time, particularly in Central European countries, we have witnessed diverse strategies to maintain vocational education under challenging circumstances. From a political economy perspective, Germany and Slovenia represent interesting cases, where corporate actors may have been in a position to counteract the decline in training provision. Macroeconomic Changes and Youth Unemployment Market reform had a dramatic and complex impact on the economy. Economic starting conditions and the timing and success of market reforms, as well as foreign investors who provided capital and technology, played varying roles in the countries studied. Hence, we do not expect a uniform relationship between liberalization, economic contraction, and recovery. As

Social Transformation in Central and Eastern Europe

13

Table 1.1 indicates, the growth of real GDP reflects the different transformation pathways to some extent. Among the post-USSR countries, Estonia recovered fastest from a comparatively deep economic crisis. In contrast, in Russia and Ukraine, where reform proceeded more slowly, the economy shrank until the late 1990s, followed by sharply rising growth rates. Economic contraction was least severe in East Germany, the Czech Republic, Hungary, Poland, and Slovenia. As expected, we observe the smallest decline and the fastest recovery in industrial output among the Central European countries. The comparison of growth rates also puts the weak growth performance of the East German economy into sharp focus (see Gebel, Chapter 3, this volume). Economic restructuring was associated with dramatic job losses. Employment rates plummeted from very high levels as rates of job destruction initially outweighed job creation. Slovenia was among the first to record positive employment growth in the mid-1990s, while in most countries studied here employment rates began to grow only in the early 2000s (UNICEF 2009). Serbia, in contrast, was still suffering from declining employment rates in the early 2000s. Hence, especially during the 1990s, the output growth documented in Table 1.1 reflects growth in productivity rather than growth in employment (Rutkowski and Scarpetta 2005). Russia and Ukraine deviate from this pattern, keeping unemployment low and employment high despite drastic declines in economic output. Delayed reform and weak welfare state support created an environment where companies did not reduce their employment levels and resorted to wage arrears as a key coping strategy (Gerber 2006). Table 1.1 shows that overall economic restructuring was accompanied by large shifts in employment between industries. Compared to EU15 countries (Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, Sweden, and the United Kingdom), we observe considerably larger shares of employment in agriculture and industry in CEE countries in 1989. Poland and Ukraine were characterized by large agricultural sectors. The share of workers in industry was exceptionally high in East Germany, the Czech Republic, and Slovenia. In subsequent years, the employment structure in CEE countries increasingly resembled that of Western Europe: Jobs in the hypertrophied, technologically backward industrial sector, as well as in agriculture, have disappeared, while the service sector has expanded. Russia, followed by

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Slovenia and Poland, experienced the strongest contraction in industrial employment, while we witness small expansions of industrial employment in Croatia and Ukraine. The transformation from socialism to capitalism shifted central lifecourse risks, most notably unemployment and poverty, back onto individuals, a process that can be described as a drastic case of recommodification (Breen 1997). In contrast to the almost immediate access to work under socialism, the change under the market regime has indeed been dramatic. Unemployment increased sharply in the early 1990s. As Table 1.1 shows, rising unemployment particularly affected young people. In 1992, their unemployment rate exceeded the adult unemployment rate on average by a factor of 3.2. Strikingly, average adult unemployment rates in CEE countries in 1992 were virtually indistinguishable from those found in Western European countries. Hence, the burden of adjustment, at least in terms of unemployment risks, has been disproportionately carried by young people. At the beginning of transformation, the situation was particularly dire for young people in Poland, Croatia, and Slovenia. Thereafter, youth unemployment declined in most countries, except for the Czech Republic and East Germany, where it increased. The situation of young people in Poland, Croatia, and Serbia is still dire, and the substantial increase in youth unemployment in East Germany should also be cause for concern. We observe the strongest recovery in the youth labor market in Slovenia. In 2007, if we disregard Serbia as an outlier, we observe no difference in average youth unemployment between Eastern and Western Europe. Relative to adults, youth unemployment declined in Croatia, Russia, and Slovenia. At the same time, relative disadvantages grew substantially in Hungary, Poland, and Estonia. On average, however, youth/adult unemployment rate ratios tend to be smaller in CEE countries compared to Western Europe. Overall, transformation has led to substantial diversity in terms of institutional and economic outcomes. Central European countries experienced the smallest shock in output but suffered strong employment losses. Economic crisis was more persistent in Russia and Ukraine, but employment losses were less dramatic. Across the region many people have suffered from declining employment, especially in agriculture and industry, which had provided jobs for the less educated and especially graduates of lower vocational tracks under socialism. Nevertheless, Central European countries still employ a considerable share of workers in industry.

Social Transformation in Central and Eastern Europe

15

While the structural changes in the economy depicted in Table 1.1 generally influence the opportunities for young people (Blanchflower and Freeman 2000), we observe that high growth rates do not automatically improve their labor market situation in CEE countries. Economic growth during the 1990s was due to productivity rather than job growth. Poland and Estonia were among the most liberal reformers and have been among the fastest-growing economies in the region; but when considering unemployment as an indicator of labor market opportunities, young people apparently did not profit as much as adults. Slow reform and prolonged economic crisis do not necessarily mean high youth unemployment, as the Russian and Ukrainian cases suggest. Interestingly, the regulated transformation in Slovenia seems to have resulted in the most beneficial outcomes for young people, at least when measured by the unemployment rate. In contrast, Croatia, Poland, and Serbia are among the countries with the most pressing problems in the youth labor market.

e duc at ion s y s t e m s i n c e n t r a l a n d e a s t e r n e u rop e 7 While labor demand is one important factor explaining the changing position of young people, the key intent of this volume is to further our understanding of the role the education system plays in CEE countries. Stratification and life-course research have shown that specific aspects of the education system, for example the organization of vocational education, are crucial determinants of youth labor market integration in capitalist societies (Allmendinger 1989; Kerckhoff 1995; Müller and Shavit 1998; Kerckhoff 2001; Breen 2005). This volume endeavors to elucidate the differences in education systems across CEE countries, how they evolved in the course of transformation, how they are related to the school-to-work transition and inequalities on the youth labor market, and how the findings for Eastern Europe compare to what is known for Western countries. As we show in Section 4.1, educational systems in CEE countries were highly differentiated under socialism, offering specialized vocational degrees especially at the secondary and tertiary levels. Section 4.2 shows that in the course of transformation, there have been path dependencies maintaining the overall structure of secondary education, but we sometimes observe substantial enrollment shifts out of lower vocational programs and

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into programs giving access to higher education. Moreover, starting from a comparatively small tertiary sector, some CEE countries expanded tertiary education at a pace hardly ever observed in Western countries. Nevertheless, in a number of countries, vocational graduates still comprise a large share of labor market entrants. Socialist Education Systems Socialism had strong homogenizing effects on the organization of the education system and the distribution of educational degrees. Socialist leaders viewed education as a crucial economic and political instrument to foster economic development and to politically indoctrinate citizens, and therefore placed the entire education system under firm state control. Educational planning became increasingly differentiated, regulating not only student quotas and resource allocation, but also the types of educational programs and specializations, curricula, and the content of textbooks, as well as regulating the flow of individuals through the education system and afterward into the labor market (Gerber 2003; Köhler and Stock 2004; Kogan, Gebel, and Noelke 2008). Individual preferences bore little or no influence on the available educational options, which were constrained by the strict limits defined by planning agencies. Secondary education. To raise educational attainment in the population, planners sought to successively increase the duration of compulsory education to eight, nine, or in some countries, for example Hungary and the GDR, ten years of education. At the same time, to diminish educational inequalities, the separation of children into different school types (tracking) at the lower secondary level was abolished in favor of comprehensive schools, resulting in the integration of primary and lower secondary education. To achieve agricultural and industrial modernization and economic growth, the education system had to supply skilled workers, engineers, and technicians. Shortages of skilled personnel led to centrally planned educational expansion and differentiation, especially at the upper secondary level, which accounts for some institutional similarities across countries. Key ideas shaping the development of secondary and tertiary education were scientific and technological advancement and the differentiation of educational pathways into specific occupations (Köhler and Stock 2004). While lower secondary education was comprehensive, upper secondary

Social Transformation in Central and Eastern Europe

17

education was highly stratified. All socialist CEE countries developed a structure consisting of three main school types at the upper secondary level: general secondary, lower vocational, and upper vocational.8 General secondary schools were the main route to university education, while the other two school types prepared students for specific occupations. Given limited mobility between school types, educational decisions taken at this stage were highly consequential for individual life courses. Lower and upper vocational schools were key instruments for economic planners to develop diverse types of skilled labor. Skill planning was managed by aggregating types of skills into clearly defined, standardized educational programs linked to specific occupations. Upper vocational schools (also referred to as technical schools) provided general and vocational education to prepare graduates for service and technical occupations. While completion of these programs qualified an individual for university attendance, general secondary students were better prepared to succeed in competitive university entrance examinations. Students in upper vocational schools could acquire well-regarded technician degrees as well as enter nonmanual, white-collar jobs. After completion of compulsory schooling, individuals could also enroll in lower vocational schools. These vocational schools were of shorter duration, did not grant direct access to university, and prepared students mainly for manual occupations, especially skilled and semiskilled work in industry, agriculture, and some lower-level service jobs. The organization, extent, and popularity of these programs differed across countries. In the Central European countries, lower vocational schools for industrial jobs were established alongside traditional apprenticeship programs. The educational concept was inspired by the dual system as it exists, for example, in Germany. Students received vocational education specific to the jobs they were prepared for in schools as well as practical training on the job in enterprises. Typically, lower vocational schools were connected to specific enterprises, where students received training. It was also common for enterprises or schools to operate training workshops where students would receive training in groups. There was considerable cross-national variation in vocational school enrollment. In some Central European countries, such as Hungary, lower vocational school graduates formed the modal group among the cohorts of labor market entrants. In contrast, lower vocational schools were less popular in the Soviet Union (Gerber 2003). They attracted the least ambitious students, despite

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substantial incentives to enter the types of jobs they gave access to. General secondary or upper secondary vocational schools remained a more attractive option for many students, even if they would not get a place in university. Next to lower and upper vocational options, general or academic secondary school continued to be the traditional pathway to university education.9 The size of general secondary schools varied considerably across countries and time. In the GDR and in the former Czechoslovakia, they retained their elite status and high selectivity. Educational planning foresaw that most students graduating from general secondary schools would enter university. In contrast to some Central European countries, the Soviet Union expanded general secondary schools substantially. Tertiary education. Central planning also dominated the higher education system. Student enrollment and graduate employment were determined by quota regulations to meet the manpower needs of planned economies (Scott 2002; Galbraith 2003). The key task assigned to universities or technical colleges was the education of specialists (i.e., engineers, natural scientists, and economists) who were expected to innovate and modernize industrial production and run the socialist bureaucracy. Compared to Western countries, enrollment was therefore skewed toward technical fields of study and natural sciences, with low enrollment in the social sciences and humanities. Higher education experienced rapid growth especially in the years after regimes were established until the 1960s. Expansion was achieved in part by the establishment of technical universities, vocational colleges, and traditional research universities. While expansion continued in Western countries, higher education enrollment tended to stagnate in the 1970s and 1980s in the CEE countries. Socialist governments strove to attain “equal access to higher education” by discriminating against old elites and officially favoring peasants and worker families, particularly during the phase of regime establishment (Róbert 1991; Solga 1995; Köhler and Stock 2004). To increase university attendance among working-class children, additional pathways to university were created. Furthermore, part-time evening and distance-learning programs for the already employed were introduced to ease access to higher education for lower social groups (Simonová and Antonowicz 2006). However, while the impact of social background on access to higher education diminished in the phase of regime establishment, inequalities strengthened

Social Transformation in Central and Eastern Europe

19

again thereafter (Gerber and Hout 1995; Solga 1995; Simonová and Antonowicz 2006; Bukodi and Goldthorpe 2010).10 Stability and Change After 1989 The transition to capitalism offered the educational sector an opportunity to change in a direction similar to that of economic reform: toward decentralization and liberalization, restoring academic freedom, and freeing individual education choices. Administrative responsibility for secondary schools was shifted to municipalities, and funding increasingly became the responsibility of the institutions themselves. In addition, it became possible for private suppliers to step in and meet the rising demand for education, especially at the tertiary level. Secondary education. As formal barriers restricting educational choice were lifted, many young people opted for more general education and higher levels of education and against lower vocational schools. The desire to postpone labor market entry until the economy stabilized and the expectation of increasing returns to tertiary education were among the key factors contributing to these shifts in enrollment. Moreover, for individuals and employers alike, general skills may have been more versatile, as they do not become obsolete in the course of technological change and may even facilitate the adoption of new technology (Krueger and Kumar 2004; Kézdi 2006). In contrast, investing in and relying on specific skills becomes risky for individuals in a rapidly changing environment (Estevez-Abe, Iversen, and Soskice 2001). Nevertheless, while enrollment shifts among upper secondary programs were large in some instances, all CEE countries adhered to the basic tripartite structure in upper secondary education. A major consequence of transformation was the growing unpopularity of lower vocational schools (see Kogan, Gebel, and Noelke 2008). Curricular content and occupational specialties became increasingly obsolete in the course of economic restructuring, while the returns to higher education rose. Possibly even more detrimental, many enterprises stopped providing training to lower vocational school students, thereby breaking a crucial link to the labor market for them. Given the traditionally more important role of vocational education and industrial employment, Central European countries, in particular, attempted to revive employer involvement in vocational education and training. Following the model of coordinated market

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economies such as is found in Germany and Austria (Hall and Soskice 2001), Croatia, East Germany, and Slovenia tried to consolidate a dual system, combining enterprise-based training with school-based vocational education, relying on the voluntary cooperation of employers. There is little indication that this form of voluntary cooperation has emerged in other CEE countries on a substantial scale. States also have tried to take a more active role, such as by providing financial incentives for employers to continue to provide training places, but only in East Germany was this done extensively. Furthermore, general education as well as school-based vocational training could substitute for enterprise-based training, a route taken in Hungary and the Czech Republic. Despite the declines in employer participation, we still observe dual-system structures in lower vocational programs in East Germany, Croatia, the Czech Republic, Hungary, Poland, and Slovenia. These programs are further analyzed and evaluated in the respective country chapters.11 A second major consequence of the transformation to capitalism was the re-emergence of early tracking. Even though this practice had been discredited under socialism, early tracking at the lower secondary level reemerged in the Czech Republic, East Germany, and Hungary. Because of the reintroduction of six- or eight-year gymnasia, sometimes offered by private or church providers, students again have been sorted into distinct educational tracks, which strongly influence their future career chances. This tracking occurs at age 10 or 11, as opposed to age 15 after the completion of lower secondary school. Table 1.2 presents the outcome of these developments by showing the distribution of educational degrees among the most recent cohorts of labor market entrants in ten CEE countries. In East Germany, the Czech Republic, and post-SFRY countries we still observe very high shares of young people entering the labor market with vocational degrees obtained at the secondary level. Despite a shift away from lower vocational programs, still around 30 percent of recent secondary graduates obtain vocational degrees, which continues the pattern observed before transformation. Upper vocational programs also have large enrollments. In East Germany, the Czech Republic, and the post-SFRY countries, more than 50 percent (even 71 percent in the Czech Republic) of all labor market entrants have either a lower or an upper vocational degree; around 90 percent of labor market entrants with an upper secondary degree belong to this group. In

EG

CZ

12.6

3.7

6.7

10.2

2.3

6.0 33.4 6.8 37.6

2001– 07

17.5 42.1 9.1 12.0

2001– 06

SI

HR

33.1

9.8 22.8 4.5 27.2 2.8

17.2

6.8

4.1 29.1 2.9 23.0

2000– 06 2003– 08

SR

PL

HU

EE

RU

17.2

9.2

3.2 27.1 3.2 27.1

19.2

5.5

4.1

18.3 18.0 27.7 7.2

6.7

11.5

16.4 12.0 25.0 20.6 7.8

4.1

5.2

30.8 12.6 4.3

43.8

38.4

4.2 12.5 16.7 26.0

2001– 05 2001– 05 2000– 04 1997–2003 2000– 05

UA

23.7

4.3

7.3

8.6 1.9 16.9 18.3 14.2

2001– 06

s o u r c e s : Calculations on the basis of the data used in the country studies. For Russia, the data are taken from Table 12.1 in Chapter 12, omitting the category “other education (2.3%).” Samples include recent labor market entrants from the above-mentioned cohorts according to the standardized definition of labor market entry as implemented in the country chapters (see Chapter 2, Methodology and Design). n o t e s : EG—East Germany; CZ—Czech Republic; HR—Croatia; SR—Serbia; SI—Slovenia; HU—Hungary; PL—Poland; EE—Estonia, UA—Ukraine; RU—Russia. The data for Croatia, Serbia, and Ukraine allowed for the identification of dropouts from tertiary education, which are not listed separately in the table. The data did not allow for a clear assignment to the successfully completed secondary school level. The corresponding figures are: Dropouts from lower tertiary education, 6.3% (HR), 4.2% (SR), 4.1% (UA). Dropouts from higher tertiary education, 10.7% (HR), 8.8% (SR), 1.0% (UA). For Poland and Russia, no information is available for the least educated, as the surveys cover individuals older than 18 years which excludes early school leavers. For Russia, higher tertiary education also includes vocationally oriented colleges otherwise grouped as lower tertiary, while post-secondary/lower tertiary comprises graduates from secondary specialized schools. For Slovenia, higher tertiary also includes three-year, higher professional education programs. For East Germany, lower secondary education is Hauptschule and Realschule, whereas lower vocational education refers to a degree from either Hauptschule or Realschule followed by vocational education and training either in vocational schools or in the dual system.

Lower secondary or less Lower vocational General secondary Upper vocational Post-secondary vocational schools Lower tertiary, vocational colleges Lower tertiary, university bachelor’s degree Higher tertiary, university master’s degree Lower and higher tertiary (without post-secondary)

Level of education

recent school leavers, cohorts by years of graduation (%)

ta bl e 1.2 Distribution of educational degrees among recent school leavers

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contrast, general secondary education, which constituted the central pathway to higher education under socialism, apparently continues to perform this function: The relative share of general secondary graduates entering the labor market directly is marginal, suggesting that many of them continue on to higher education. This pattern appears to be almost reversed in postSoviet Union countries. Here graduates from general secondary and upper vocational programs represent the majority of labor market entrants with a secondary degree. Lower vocational programs, already unpopular under socialism (Gerber 2003), play a marginal role, while large shares of students acquire post-secondary vocational or higher tertiary qualifications. Poland and Hungary fall in between the post-Soviet countries and other Central European countries (East Germany, the Czech Republic, and the post-SFRY countries). At the time of transition, lower vocational programs were similar in size compared to the other Central European countries (Baranowska 2008; Bukodi and Róbert 2008), but their numbers shrank rapidly after 1989, and currently more young people enter the labor market with a general secondary or upper vocational degree. Tertiary education. Liberalization of education policy and rising individual demand for higher education translated into expansion and diversification of higher education.12 In general, the emerging private sector, along with the commercial turn in the public one, has led to strong increases in enrollment. The emergence of private providers and tuition-based public study places introduced new lines of differentiation (in terms of quality, prestige, and selectivity) within the higher education sector in CEE beyond those existing ones between universities and second-tier, lower tertiary institutions. Universities expanded through the integration of monotechnical institutions into multifaculty universities as well as through the (re)integration of research institutes, once managed separately by academies of science or central ministries under socialism (Scott 2002). Expansion also occurred through the growth and establishment of non-university (so-called second-tier) institutions, such as vocational colleges and short-term postsecondary vocational schools. While some of these second-tier institutions were newly founded, others resulted from the upgrading of formerly secondary vocational schools. Growth occurred because emerging labor markets showed an increasing demand for post-secondary qualifications

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that were less academically oriented and of shorter duration than those provided by traditional universities (Cerych 1997). In some CEE countries, higher education systems diversified as traditional universities began offering second-tier education in the form of short-term bachelor programs that allow direct entry into the labor market as well as access to second-degree academic master courses.13 An important consequence of liberalization was also the changing distribution of students in specific fields of study, so that the dominance of engineering and natural sciences has been displaced by social sciences, especially business administration and information technologies (Scott 2002). Depending on the legal context, private providers could also step in to meet the rising demand for higher education. Private-sector institutions flourished in a number of countries. Relying entirely on enrollment for revenue, they show a stronger consumer orientation, or “client-seeking,” behavior (Arum, Gamoran, and Shavit 2007, 7), offer shorter, labor-marketoriented courses (e.g., business studies), and maintain ties with firms. Additionally, they are smaller and more flexible in adapting their curricula to labor demand (Kwiek 2008). The growth of private-sector institutions raised concerns about the quality of teaching and research in this new sector and led to the establishment of quality monitoring and accreditation procedures (Simonová and Antonowicz 2006, for the Polish case). While socialist public universities were traditionally free of charge, they also began offering tuition-financed places to improve the financial situation in the underfunded public sector (Kwiek 2008). With the introduction of tuition-based study places next to the limited number of state-funded places, public providers also reacted to the increasing individual demand for higher education. State-funded, usually full-time study places are reserved for (and also preferred by) the best applicants. Applicants in the “second row” get access to tuition-based places that are often part-time or percorrespondence arrangements (Simonová and Antonowicz 2006). In a way, public providers have become semiprivatized by depending increasingly on tuition fees (Scott 2002); as a result, they have entered direct competition with private providers for less-competitive students. In the early 2000s, East Germany and the Czech Republic stood out among countries studied in having a small tertiary sector dominated by traditional universities (Table 1.2). The Czech system is more differentiated than the East German one: In East Germany, vocational colleges

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(Fachhochschulen) are virtually the only second-tier institutions, while both short-term post-secondary vocational schools and vocational colleges have emerged in the Czech system. Furthermore, Czech universities had already introduced sequential bachelor–master structures in the period studied. Poland represents another differentiated system, with a sequential degree structure but larger in all dimensions when compared to the Czech one. Hungary reaches a similar size of post-secondary vocational schools and vocational colleges, while the higher tertiary programs remain exclusive. Countries of the former SFRY (Serbia, Croatia, and Slovenia) form another cluster, with small or nonexisting short-term, post-secondary vocational schools and expanded traditional universities. Finally, the countries emerging from the Soviet Union (Estonia, Russia, and Ukraine) are characterized by both expanded lower and higher tertiary education sectors.14 The extent of tertiary expansion appears to correlate with the size of lower vocational programs, which do not grant direct access to higher education. We observe the largest shares of labor market entrants with tertiary degrees in Russia and Ukraine and the smallest in East Germany and the Czech Republic.

t h e t r a n si t ion f rom s c ho ol t o wor k u n de r so c i a l i sm Under socialism, skill planning was mainly accomplished through implementing highly differentiated vocational education programs at the secondary and tertiary levels. Many individuals acquired specific vocational qualifications over the course of their education, which aggregated bundles of job tasks into clearly defined, standardized educational programs. Socialist planners had to provide many incentives to push individuals into these often highly specialized programs, a choice people could rarely correct later in their lives. Planners then had to match these graduates with specific occupational qualifications to the demand for specialized labor. This led to strong links between educational qualifications and occupational outcomes. As in other areas of the socialist economy, however, efficient planning was inherently difficult and frequently led to scarcities or the accumulation of surpluses (Kornai 1992). The available evidence points to substantial mismatches as a result of planning deficits,15 which likely motivated unplanned individual job mobility.

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Beyond planning the supply of skills, the actual transition from school to work was itself administratively regulated. In the Soviet Union, for example, this was accomplished through mandatory work assignment plans for graduates from vocational and tertiary programs (Gerber 2003).16 Planners generally needed to regulate worker flows to meet production targets, which meant that individuals had to be allocated to production sites like other production inputs according to the current planning goals. In the case of allocation of workers to jobs, the information problems experienced by central planners seemed to be insurmountable. To obtain efficient matches, they had to know each person’s specific skills and the employer’s skill requirements and preferences. If this information was imperfect, centrally planned job matching was bound to fail, necessitating subsequent reallocation, which subverted the original assignment and put further burdens on planners. The available evidence casts doubt on the efficiency of centralized labor allocation.17 Although undesirable to planners, labor mobility (between firms and across occupations) persisted on a large scale as individuals tried to undo the misallocations of central planners (Huinink, Mayer, and Trappe 1995 for the GDR). Socialist leaders assumed that central planning could avoid some of the perceived ills of capitalism, especially unemployment. Indeed, unemployment as a life-course risk was largely eliminated under socialism,18 which diminished risks and uncertainties associated with entry into working life. Given the practical nonexistence of open unemployment, little variation existed between school leavers in the more or less immediate transition from school to work, whatever qualifications they had upon entering working life. However, the absence of unemployment was in itself partly a result of the endemic inefficiencies of the central plan—that is, the tendency of enterprises to hoard production inputs including labor (Kornai 1992). Job assignments were structured by the credentialist practices of the manpower planning system. To be hired or promoted, workers had to possess at least the minimum required qualifications. Thus, the link between workers’ qualifications and the socioeconomic status or class position of jobs they could obtain was pronounced and usually was at least as pronounced as in capitalist systems. Wages were also tied to qualifications, although with lower inequality and partly different treatment of particular types of jobs than in capitalist systems. Yet, while qualifications clearly mattered, party and system loyalty also influenced access to good jobs.

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In sum, the transition from school to work during socialism can be characterized by three features. First, school leavers became speedily integrated into work. Employment was virtually guaranteed and unemployment rarely occurred, regardless of qualifications or other individual characteristics. Second, access to jobs of different status and class position was strongly related to qualifications, while income inequalities attached to the different jobs were less pronounced. Third, the available evidence suggests that occupational and between-firm mobility in the early work career persisted as people tried to undo inefficient assignment outcomes (Huinink, Mayer, and Trappe 1995).

t h e i m pac t of so c i a l t r a n sf or m at ion on t h e t r a n si t ion f rom s c ho ol t o wor k While we observe considerable heterogeneity in macroeconomic conditions, these factors alone do not account for the impact of transformation on the transition from school to work. To understand the emerging and changing youth labor market in CEE countries, both the education system and changes in the education system triggered by transformation are crucial factors. In Chapter 2, we further develop how transformation processes and highly diversified education systems have interacted to restructure the transition from school to work. The following paragraphs preview the key questions and hypotheses dealt with in the remainder of this volume. In general, transformation has given rise to rapid economic restructuring and led to the emergence of open unemployment. Job loss and rising job turnover imply that finding and keeping a first job has become more difficult for young people. This was particularly the case in the turbulent early 1990s. At the same time, however, the quality of available jobs should be rising, as low-skill jobs in agriculture and industry are eliminated and more skill-intensive jobs in the service sector are created. The recovery of industrial output and the relative persistence of industrial employment in Central European countries should generate favorable conditions for graduates from vocational programs, which are still numerous in these countries. Furthermore, the declining number of vocational programs may have diminished competition for jobs, such as for manual work in industry. While risks and uncertainties have certainly risen, young people have been

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compensated with access to better-quality employment, at least for those sufficiently qualified. Additionally, transformation has freed young people from coercive state regulation of their career choices and opened new opportunities in education and on the labor market. How have the new risks and opportunities been distributed? We expect that to the extent that market competition is effectively implemented, labor market outcomes should become more dependent on educational attainment. While this has been shown for earnings, we expect it also to be the case for access to the first job. Differences in job quality, however, are likely to be more stable, since there was already a strong link between qualifications and occupations under socialism. To the extent that education-based inequalities are rising, we will focus here on the role that educational institutions play in shaping these inequalities. We have seen that, at the secondary level of education, the basic tripartite structure has been maintained, but we observed at times dramatic enrollment shifts, in particular out of lower vocational programs. The analyses in this volume explore whether, how, and why vocational education, and in particular lower vocational programs, have been affected by transformation. A first key question therefore is, Can vocational programs be effectively adapted to changing circumstances to provide a smooth entry into skilled employment? Or, have vocational programs become dead ends for individual careers, preparing individuals for work in obsolete trades? The institutional context is likely to be crucial. In particular, we would expect that if employers are involved in vocational school education or provide training to vocational students, graduates from these programs would still experience a rapid transition into employment. With the transition to capitalism and the accompanying liberalization of educational policy, post-secondary education has begun expanding and diversifying in some CEE countries at a speed rarely observed in Western countries. As a consequence, new lines of social differentiation have emerged within universities in CEE between first-degree bachelor and second-degree master courses, between tuition-based and tuition-free university places, and between public and private education providers. Expansion and diversification have also occurred through the growth and establishment of non-university, second-tier institutions, such as vocational colleges and short-term post-secondary vocational schools, which represent another line of social differentiation. The question arises as to whether these

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new lines of differentiation translate into unequal labor market chances and whether the country-specific magnitudes of expansion and diversification lead to different patterns of labor market attainment of tertiary graduates between CEE countries. Chapter 2 provides the theoretical and methodological backgrounds of the country studies that follow. The theoretical considerations outlined in the preceding sections are developed in further detail, focusing on the labor market outcomes of specific educational degrees and their changes over the course of transformation, and formulating concrete hypotheses regarding the outcomes analyzed. The chapter concludes with a discussion of methodological approaches to identifying the role of educational institutions in the school-to-work transition, followed by a description of the standardized methodological framework and design of the subsequent country studies. Chapters 3 through 12 comprise the country studies, in which national experts analyze the role of the education system in structuring the transition from school to work. Drawing on the institutional dimensions and concepts outlined in Chapters 1 and 2, they provide an analytical description of key features of each country’s education system, including a quantitative analysis of social inequality in educational attainment. Each chapter analyzes how individuals with different educational backgrounds fare in their early labor market careers, how quickly they are able to find a first significant job, the quality of that job, and the duration and mobility out of that job. Several country chapters also show how these processes have changed over time.19 While each country study uses a common methodology and provides comparable analyses, each chapter also has its own thematic focus, providing additional analyses on country-specific topics. In a concluding analysis (Chapter 13), we review key results and conclusions from the chapters in this volume, focusing in particular on the consequences of educational expansion for young people and the effectiveness of secondary programs in integrating young people into the labor market. Furthermore, we summarize results from cohort analyses in Russia, Estonia, and the Czech Republic to uncover the impact of different transformation processes in these countries on the transition from school to work.

chapter two

The Transition from School to Work in Central and Eastern Europe Theory and Methodology Michael Gebel and Clemens Noelke

i n t roduc t ion The transformation from socialism to capitalism in Central and Eastern Europe (CEE) had a profound impact on individual life courses. While access to employment was normally guaranteed under socialism, the rise of capitalism made people’s economic status again depend on their labor market situation. Transformation implied profound economic (and political) changes: liberalization of the economy and labor markets, rising exposure to the global economy, rapid economic restructuring, and educational expansion. Unemployment rose quickly, especially among young people, reflecting that the transition into employment had become much more insecure and contingent across CEE countries. These events bear some resemblance to the changing situation in youth labor markets in Western countries, which have been reshaped by persistent unemployment and flexibilization of employment relationships, concurrent with educational expansion, technological change, and globalization (Blossfeld et al. 2005; Blossfeld et al. 2008). Given the precarious labor market situations of young people across developed countries, particularly in the aftermath of the economic and financial crisis of the early 2000s, there is continuing interest in understanding the structural and institutional forces shaping the transition from school to work in order to improve outcomes of this transition and prepare young people for the long and productive careers that sustain aging societies. Although explanations based on the impact of economic restructuring are important to account for young people’s difficulties in the transition 29

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from school to work, demand-based explanations alone do not suffice. To obtain a better understanding of the impact of transformation in CEE, we need to focus on the area’s diversified and dynamically evolving education systems. Past research on Western countries has shown that understanding the education system is crucial for understanding inequalities and crossnational differences in labor market entry patterns (Allmendinger 1989; Kerckhoff 1995; Müller and Shavit 1998; Kerckhoff 2001; Müller and Gangl 2003; Breen 2005; Wolbers 2007). Moreover, understanding the education system could become an effective tool for public policy, enabling interventions that will profoundly improve social and economic outcomes for many young people. In the preceding chapter, we showed that CEE countries had a strong vocational orientation under socialism, but they experienced substantial expansion in higher education after 1989, with important variations across countries. From a comparative perspective, these trends reflect the institutional conditions and changes in other advanced economies (Müller and Wolbers 2003). European countries, such as Germany and Austria, have developed diversified vocational education programs at the upper secondary level to prepare young people for skilled positions. Anglo-Saxon countries, such as the United Kingdom and the United States, have expanded general secondary education and access to post-secondary and tertiary education, partly by facilitating the entry of private education providers and tuitionfinanced admission. These solutions to the problem of skill formation have been contested in the respective countries, and their advantages and drawbacks have figured prominently in public debates. Studying the transition from school to work in CEE addresses a number of central issues in this debate. It allows us to understand the impact of social transformation on this crucial life-course transition and to obtain insights into the challenges faced by young people across CEE countries. This chapter focuses on the following questions: To what extent can specialized vocational education at the secondary level be sustained in a rapidly changing economic environment? What are country-specific factors affecting the success of vocational education? What role do changes in labor demand play, and how do these changes affect the labor market outcomes of graduates with different secondary and tertiary degrees? What are the consequences of rapid expansion and differentiation in higher education? Do different approaches to educational expansion have different

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consequences for social inequality in access to higher education? How much better can tertiary institutions prepare young people for the labor market compared to secondary (vocational) institutions? In the balance of the chapter, we discuss these questions theoretically and outline the methodological framework used in the analyses in this volume. In the first section, “Education Systems and the Transition from School to Work,” we highlight the general role of the education system for the transition from school to work. In the second section, “Restructuring the Transition from Secondary Education: Breaking Links and Rising Inequalities?” we discuss how transformation has changed the transition from school to work for secondary graduates, focusing on the role of economic restructuring and changes in the education system as key mechanisms, and highlighting the changing role of vocational education. In the third section, “Post-Secondary Education: Expansion, Diversification, and Marketization,” we focus on the impact of transformation on tertiary graduates, outlining the consequences of expansion and differentiation in higher education. Finally, in the fourth section, “Methodology and Design,” we outline the methodological background and research design of the studies presented in this volume. These theoretical considerations provide a background for the following country chapters and the comparative Chapter 13.

e duc at ion s y s t e m s a n d t h e t r a n si t ion f rom s c ho ol t o wor k Focusing on the education system,1 we see that inequality between education groups at the transition from school to work has two main causes. First, institutional characteristics of education programs directly influence the labor market outcomes of graduates by increasing the skills of individuals (Becker 1964). For example, individuals receiving on-the-job training in the course of a vocational education program accumulate specific skills, which then may result in superior labor market outcomes compared to individuals who do not receive training. Alternatively, differences between programs result in unequal selection of students into different programs. If one education program attracts students who are positively selected with regard to characteristics rewarded by employers, their labor market outcomes will be superior compared to graduates from other programs (Spence 1973). Furthermore, education systems affect the flow of information

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between individuals searching for jobs and employers attempting to fill vacancies (Rosenbaum et al. 1990). Since information on suitable jobs or qualified employees can be difficult to obtain (Johnson 1978; Jovanovic 1979; Mortensen and Pissarides 1999; Breen 2005), education systems can provide crucial linkages between supply and demand, reducing transaction costs and excess turnover. Given the centrality of the education system in learning, selection, and matching processes, sociologists have developed a variety of analytical dimensions and typologies to capture different aspects of its function. To explain variations in labor market entry patterns, sociologists have used country-level typologies, contrasting qualificational with organizational spaces (Maurice, Sellier, and Silvestre 1986; Müller and Shavit 1998) and organizational (firm-internal) with occupational labor markets (Marsden 1990; Gangl 2001). Other work has classified different educational programs or entire education systems according to their degree of stratification and standardization (Allmendinger 1989; Breen, Hannan, and O’Leary 1995; Kerckhoff 1995; Müller and Shavit 1998; Kerckhoff 2001), occupational specificity, and labor market linkages (Rosenbaum et al. 1990; Müller and Shavit 1998; Rosenbaum and Jones 2000; Shavit and Müller 2000). While the previous concepts and typologies were mainly developed to systematize structural differences at the secondary level, other concepts have been developed to account for variability at the tertiary level (Müller and Wolbers 2003; Van de Werfhorst 2004; Shavit, Arum, and Gamoran 2007). Furthermore, other aspects of educational programs have been emphasized as crucial for both labor market entry and educational attainment; for example, the duration of programs (Erikson and Jonsson 1996), the amount of resources invested into certain schools or programs (Card and Krueger 1992; Arum 1998), and school effects including differences between public and private institutions (Coleman and Hoffer 1987; Sørensen and Morgan 2000). In the following, we provide a theoretical overview of how the education system structures different aspects of labor market integration, including time elapsed until finding a first job, quality of the first job, and job stability. Instead of aggregating different institutional features into country-level typologies, we provide an overview of key dimensions that characterize the structure of education systems at secondary and tertiary education levels and are relevant for labor market entry. Drawing on microsociological and

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microeconomic models of behavior, we derive hypotheses to explain how different institutional dimensions affect individual labor market outcomes, and how they interact with other educational institutions. While these theoretical considerations are general, we focus on CEE societies in the process of transformation. Transformation implied drastic institutional and economic changes, which bear similarities to the changes many Western countries have experienced since the 1970s: economic restructuring, globalization and market liberalization, skill-biased technological change, and educational expansion (Gangl 2002; Müller and Gangl 2003; Blossfeld et al. 2005; Blossfeld et al. 2008). The impact of transformation on labor market entry in times of accelerated structural change should be instructive both for European countries that operate stratified, vocationally oriented education and Anglo-Saxon countries, such as the United Kingdom and the United States, that opted for tertiary education expansion, where private education providers play an important role. We elaborate on the role of the education system and its interaction with economic institutions and shifts in labor demand to reshape the transition from school to work.

r e s t ruc t u r i ng t h e t r a n si t ion f rom se c on da ry e duc at ion: br e a k i ng l i n k s a n d r i si ng i n e qua l i t i e s? While lower secondary education is comprehensive in CEE countries, upper secondary education is stratified. With some qualifications (see Chapter 1 for a more detailed overview; see also Kogan 2008a) and with the exception of East Germany, the CEE countries analyzed here have developed a tripartite structure at the upper secondary level. These three main school types are lower vocational, general secondary, and upper vocational. Mobility between these tracks is limited; and tracks differ in their duration, curricula, and linkages to employers, as well as their opportunities for access to higher education. Both general secondary and upper vocational programs give access to higher education, while general secondary is the traditional route to university. Degrees from upper vocational programs also prepare for and give access to non-manual occupations, including technical and clerical jobs, which were considered relatively prestigious under socialism. In contrast, lower vocational programs generally do not provide direct

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access to university education and prepare individuals for less prestigious occupations, mainly semiskilled and skilled manual work in agriculture and industry. Under socialism, these schools were often attached to specific enterprises, which partially financed them and offered on-the-job training for students. Since transformation, employers have increasingly withdrawn from training lower vocational school students, and attempts were made to reform the lower vocational school sector. We have observed substantial enrollment shifts at the secondary level mainly from dead-end lower vocational into secondary programs that give access to higher education. How do graduates from these different secondary programs perform at the transition from school to work? What has been the impact of transformation, and what role do institutional features of education systems play? We focus in particular on the effect of regulations on access to higher education, curricular content, and employer linkages as central institutional dimensions of secondary education. From the perspective of labor demand, we highlight the impact of economic transformation, which induced sectoral restructuring and altered labor demand as well as linkages between vocational education programs and employment. Stratification A salient feature of upper secondary education in CEE countries is their high degree of stratification. In keeping with the existing literature (Allmendinger 1989; Kerckhoff 1995; Müller and Shavit 1998; Kerckhoff 2001), we define stratification as horizontal differentiation within levels of the education system; in other words, the existence of distinct, institutionally structured educational programs2 at the same level of education. Education systems always exhibit some degree of institutionalized horizontal differentiation. The degree of stratification is a function of (1) early sorting (i.e., allocation of students into different programs at an early age), (2) the opportunities to switch between educational programs after the initial decision has been made, and (3) the extent of separation of different educational programs into physically and organizationally distinct schools or school types. Stratification thus defined has no direct or independent effect on social inequality in educational attainment or at the point of labor market entry:3 If there are segmented programs at the same level of education, keeping everything else constant, there is no mechanism that would lead to systematic

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social inequalities between programs. Stratification of education systems will only increase social inequalities in educational attainment if there are qualitative differences between programs, not because of differentiation per se. We propose that the effect of stratification is interactive, in that a high degree of stratification amplifies the effect of other qualitative differences. Stratification, in combination with a differentiating qualitative characteristic, segments students into separate, unequal learning environments. Through peer effects, the impact of qualitative differences on learning outcomes is amplified. Stratification also may affect the quality of educational degrees as signals. By teaching and socializing individuals in unequal and separate environments, highly stratified education systems produce educational groupings, which employers—by considering the individuals’ educational credentials—can more easily correlate with underlying average productivity. Hence, employers are more likely to rely on education as a signal of applicant productivity in a highly stratified education system, and we should observe greater inequality in labor market outcomes between education groups in countries with a more stratified education system (Allmendinger 1989; Müller and Shavit 1998). As Chapter 1 shows, education systems across CEE countries are highly stratified. In a cross-country ranking (Pfeffer 2008), we find a higher degree of stratification only in German-speaking countries owing to their earlier point of selection. However, while under socialism selection usually occurred between grades 8 and 10, since transformation this threshold occurs earlier in East Germany, the Czech Republic, and Hungary (Kogan 2008a). In these countries, pupils can now enter long general secondary programs (gymnasia) after grades 4–6. Hence, we would expect the strongest variation between educational groups at the secondary level in these countries. At the same time, other countries, for example Slovenia, have created more opportunities for upward mobility by opening channels for lower vocational school graduates to become eligible for university admission. Access to Higher Education A key factor differentiating programs at the secondary level in CEE countries is whether or not they grant access to higher education, especially university admission. When choosing among secondary school options, individuals who place a high subjective utility on attending university would systematically avoid dead-end educational programs. Children who are

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particularly able and/or have privileged family backgrounds therefore disproportionately attend university-bound programs, under socialism as well as capitalism, while less able and/or less privileged students sort into educational dead-end tracks (Erikson and Jonsson 1996; Breen and Goldthorpe 1997; Breen and Jonsson 2005). Because of these formal barriers to university entry, student populations across dead-end and non-dead-end tracks differ in their composition.4 These compositional differences then translate into different labor market outcomes to the extent that the characteristics driving selection are valued by employers. Furthermore, particularly in highly stratified education systems, compositional differences amplify inequalities in skill acquisition across tracks through peer effects: More learning is likely to take place in tracks predominantly composed of high-ability and highly ambitious students (see, for example, Gamoran and Mare 1989). We therefore expect students enrolling in university-bound upper secondary (general and vocational) programs to be positively selected in terms of ability and motivation, compared to students enrolling in dead-end lower vocational programs. While the effect on the duration of job search is not immediately clear (more-able individuals may search more selectively), students from dead-end lower vocational programs obtain jobs of worse quality, such as in terms of socioeconomic status. In practice, beyond compositional differences, a number of other aspects differ across tracks, which are discussed below. Curricular Content Differences in curricular content are a key factor differentiating educational programs. Drawing on human capital theory, we can differentiate programs by the extent to which they are oriented toward general or specific skills (Becker 1964). General skills raise productivity in a broad set of tasks in different jobs, occupations, or industries, while specific skills raise productivity at specific tasks or specific jobs only. Most skills are neither perfectly general nor perfectly specific but fall somewhere along the continuum between these two ideal types. Corresponding to this distinction, social scientists generally classify programs at the secondary level as either academic or vocational (Müller and Shavit 1998; Iannelli and Raffe 2007). Instruction at general or academic programs is oriented toward preparation for higher education and focuses on teaching general skills in a broad set of

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subjects. Vocational programs also provide general skills; but their content is oriented toward skills that are specific to certain industries, occupational fields, or even specific occupations. Vocational programs can therefore be further differentiated by the field of study, industry, or occupation for which they prepare, and by the extent to which they provide specific skills, meaning the extent to which they provide skills that allow individuals to perform concrete tasks in the workplace. In the context of CEE countries, general secondary programs mostly focus on general skills and preparation for university studies, while lower vocational programs tend toward narrow specialization in specific occupations. Upper vocational programs provide a mix of general education preparing students for higher education as well as vocational skills. Assuming that upper general and vocational secondary graduates are identical in all aspects except for the curriculum they have taken, we would expect that graduates from upper vocational programs enter the labor market faster and obtain jobs of better quality, because of the stronger labor market orientation of their education. Employers prefer graduates with matching specific skills, because that saves investment in on-the-job training, or because graduates with specific skills are initially more productive than graduates with general skills only. However, whether or not school-based upper vocational programs lead to faster labor market entry (Müller and Shavit 1998) depends on whether or not the vocational skills acquired match employer demand. If production technology changes rapidly, vocational curricula— unlike general curricula—are likely to become obsolete, at least in part, and require adjustment. Some form of coordination is needed to ensure correspondence between what is taught in school and what employers demand. Coordination may be fully market based; but it is often assumed that the effect of vocational education is stronger if employers are regularly and formally involved in the maintenance, organization, and updating of school-based vocational education (Shavit and Müller 2000, 36), as opposed to spontaneous, unregulated market-based coordination between education providers and employers. If such institutionalized coordination breaks down, vocational skills could become obsolete, and graduates from vocational programs are likely to be disadvantaged relative to graduates from upper general secondary education because they have acquired fewer general skills.

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Institutionalized Linkages Between Education System and Employers Due to incomplete information on the labor market, employers are generally assumed to have difficulty assessing the expected productivity of applicants fresh out of school (Spence 1973, 1974; Rosenbaum et al. 1990; Altonji and Pierret 2001; Breen 2005). Similarly, young people lack information about suitable vacancies and have to search for job offers and evaluate the quality of future employers (Mortensen and Pissarides 1999). Links between the education system and employment may facilitate the flow of information, and lower search and turnover costs. Advanced economies differ substantially in the extent to which coordination between education system and labor markets has been historically established, institutionalized, and maintained (see Culpepper and Thelen 2008). In a number of advanced Western countries, we observe cooperative relations between different corporate actors, especially employers’ associations and trade unions. These relations extend from bargaining over wages and work-related issues to the maintenance and administration of large-scale apprenticeship systems. Such formalized coordination can ensure that vocational curricula are regularly maintained to reflect current employer demand, increase the reliability of educational credentials, and create employer-sponsored on-the-job training places. By becoming involved in publicly financed, school-based vocational education, employers can ensure that vocational curricula are aligned to their current skill demand; and by being involved in designing curricula, they are better able to relate educational credentials to future performance (Shavit and Müller 1998, 2000). As educational credentials become more reliable indicators of performance, they should play a stronger role at the transition from school to work. We therefore expect that graduates from lower or upper vocational courses benefit in terms of the speed of labor market entry compared to graduates from upper general secondary courses, if employers are actively involved in the provision of school-based vocational education. Another form of employer involvement in the education system occurs when employers provide on-the-job training to students who are at the same time enrolled in publicly financed vocational education programs. This arrangement is typical for German-speaking countries (Franz and Soskice 1994), where the so-called dual system is deeply embedded in economic institutions and is a crucial factor in the society’s comparative advantage

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in global markets (Hall and Soskice 2001. Also, in CEE countries lower vocational schools in particular have traditionally combined classroombased vocational education with workplace-based training. By receiving training in companies, students obtain specific skills, often related to a particular occupation and not just a particular employer. Because these skills are acquired at the workplace, they are more likely to be up to date in terms of production technologies. Participating in firm-based training also creates a screening opportunity for employers. By observing individuals on the job, they can obtain a reliable estimate of the students’ expected productivity, which reduces information problems in subsequent hiring decisions (Acemoglu and Pischke 1998; Breen 2005). Providing on-the-job training is often associated with net costs for employers that can only be recovered if the individual receiving training stays with the training firm for a longer period (Becker 1964; Acemoglu and Pischke 1998). As a result, there are lower incentives to offer firm-based training during cyclical downturns or in the course of economic restructuring. In response to such pressures, in a number of countries, including Germany, publicly financed school-based training is in part substituted for employer-financed enterprise-based training (Thelen 2007). In this case, we would expect clear advantages in terms of the speed of finding a first significant job for students enrolled in the same vocational course who have obtained firm-based training compared to those who have not. At companies, students can acquire both up-to-date training and job-specific skills, as well as an opportunity to prove themselves to potential future employers. This screening interpretation of firm-based training also raises the possibility that labor market advantages associated with it may not result from the acquisition of skills, but from selection effects. For employers, it is crucial to find out about the unobservable abilities of students before hiring, and obtaining this information may be a key motivation for participating in training programs (Franz and Soskice 1994; Acemoglu and Pischke 1998). The Impact of Transformation We argued in Chapter 1 that to the extent that market competition is effectively implemented and enforced, we should observe growing inequalities in labor market outcomes between educational groups. In this chapter, we argue that educational institutions and their links to employers are crucial

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in shaping labor market inequalities at the transition from school to work. We now combine these two perspectives to understand who has won and who has lost at the transition from school to work in the course of transformation from socialism to capitalism. Transformation empowered employers in newly privatized companies to decide, autonomously, whether and to what extent they want to participate in training students from lower vocational schools. As power has shifted to employers and markets, we have not witnessed a concurrent emergence of powerful, cooperative industrial-relation regimes in the majority of postsocialist CEE countries. However, research on Western countries suggests that providing employer-sponsored on-the-job training may be contingent on the existence of specific industrial-relations regimes, which promote formal coordination among employers, provide incentives to participate in training, and prevent poaching of skilled workers (for example, by equalizing wages in skill groups within industries) (Franz and Soskice 1994; Hall and Soskice 2001). In the absence of such industrial-relations regimes, we are skeptical whether vocational education could be reformed so that skills are continually up to date, and that sufficient amounts of training places in companies are provided. Hence, we expect that transformation and economic restructuring have particularly affected vocational graduates. Both upper vocational and lower vocational students should lose ground relative to general secondary graduates, to the extent that vocational skills are becoming obsolete. Vocational graduates’ speed of labor market entry, relative to general secondary graduates, should diminish. Lower vocational graduates are especially likely to be negatively affected. They have suffered dramatically from declining employment opportunities due to job losses in agriculture and industry. Because of the (on average) one year shorter programs, they acquire fewer skills than upper secondary graduates, and their curricula have the most specific orientation, which makes their skills most vulnerable to obsolescence. Substantial declines in employer-sponsored on-the-job training destroyed what is most likely their key asset in the competition for jobs: up-to-date specific skills and a chance to prove themselves to future employers. Finally, substantial enrollment shifts from lower vocational schools suggest that individuals already perceived these tracks as dead ends, which may have led to an increased adverse selection among those who remain (Solga 2002). Thus we would expect that lower vocational graduates, in particular, experience

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increasing difficulties in finding a first significant job; these graduates may even be forced to accept lower-quality, unskilled-worker jobs. As noted in Chapter 1, however, Central European countries in this study—which still rely on a skilled industrial workforce—have taken steps to consolidate lower vocational programs. We would expect a comparatively strong performance of lower vocational graduates in terms of employment and job quality in countries where access to employer-provided training could still be maintained on a large scale. Demand-side factors are likely to be crucial for individuals with only lower secondary (general) education. Under socialism, unskilled workers benefited relative to skilled workers from chronic labor scarcity and communist wage norms, but their position changed drastically with transformation. Demand shifts caused by economic restructuring and technological modernization led to the destruction of many unskilled jobs, while skillintensive, mainly service-sector jobs grew. This considerably worsened job opportunities for the less educated, and we expect them to have growing problems in terms of entry into employment. The position of upper general secondary graduates is ambiguous. The predominantly general orientation of their education may be an asset, since their skills by definition cannot become obsolete and employers may consider them more versatile in a technologically changing environment (Hanushek and Mertaugh 2005). To the extent that they face difficulties in entering the labor market directly, they potentially had the opportunity to enter higher education and upgrade their labor market chances. At the same time, this implies that general secondary graduates who do not continue in higher education may become increasingly negatively selected, which harms their labor market position.5 More generally, upper general secondary graduates lack preparation for a specific occupation or occupational field. Without a clear vocational orientation, they are likely to exhibit more mobility than other groups in a situation where job choice is increased and the labor market is more turbulent. Furthermore, in the course of post-secondary expansion, general secondary graduates may increasingly face competition with higher-educated applicants, which puts them at an increasing disadvantage in terms of finding a first job. At the same time, general secondary graduates tend to have more-privileged social origins compared to lower vocational graduates, and may therefore be in a better position to hold out on the labor market until obtaining a high-quality job offer.

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p os t - se c on da ry e duc at ion: e x pa n sion, di v e r si f ic at ion, a n d m a r k e t i z at ion Previous research on the school-to-work transition has mainly focused on the institutional differentiation of secondary education and paid less attention to stratification within higher education. This perspective has been appropriate for a small, exclusive tertiary education sector. Later research, though focusing on growing post-secondary education participation, has underlined the importance of stratification within tertiary education for social inequality and labor market inequality processes (Müller and Wolbers 2003; Van de Werfhorst 2004; Arum, Gamoran, and Shavit 2007; Gerber and Cheung 2008).6 With the transition to capitalism and the accompanying liberalization of educational policy, post-secondary expansion and diversification began to accelerate in CEE. The traditional university sector expanded and diversified through the introduction of tuition-based part-time and full-time university places, the emergence of private universities, and the reorganization of one-cycle, long-term programs into sequentially organized bachelor and master programs. Expansion and diversification also occurred through the growth and establishment of non-university “second-tier” institutions, such as vocational colleges and short-term post-secondary vocational tracks. We observe considerable variation in the magnitude of expansion, the degrees of exclusiveness and differentiation, and other institutional aspects detailed below. We explain how graduates from different post-secondary education programs perform during the transition from school to work and whether these effects vary under different institutional arrangements. Specifically, we discuss the role of curricular content, duration, quality and organizational differences, student allocation, openness, and the impact of marketization. We highlight the potential impact of macrostructural trends, such as the expansion and diversification of tertiary education as well as changes in labor demand in the course of economic transformation. Curricular Content A key factor differentiating post-secondary vocational schools and vocational colleges from universities is differences in curricular content. We can distinguish between academic research-oriented and applied labor-

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market-oriented programs; this categorization mirrors the distinction between general and vocational programs at the secondary level (Müller and Wolbers 2003; Van de Werfhorst 2004). Academic programs are composed of courses that prepare students for academic work and research within the particular field of specialization, as well as higher professional courses, such as medicine or law. While much knowledge is specific to the academic discipline, these courses also foster the development of complex analytical reasoning (i.e., general skills), which qualifies graduates for research careers or high-status managerial, professional, and administrative positions. The academic orientation applies to one-cycle, long-term programs as well as sequentially organized academic bachelor and master programs at universities. Applied labor-market-oriented programs at post-secondary vocational schools and vocational colleges similarly foster development of general skills, but the substantive content of courses is more closely oriented to performing concrete occupation-specific tasks at future workplaces and not to preparing students for higher tertiary or research-oriented courses.7 Those programs are usually dead ends with no chance, or very restricted chances, of later being admitted to a university program. Furthermore, some vocational programs combine classroom learning and on-the-job training in a company. This labor market orientation and vocational specificity should facilitate rapid labor market integration and guarantee better match quality, making job exits less probable, compared to academic programs with otherwise identical characteristics. The horizontal division of educational programs into different fields of study represents another important differentiation in curricular content (Van de Werfhorst 2004; Allen and van der Velden 2007). Since the fall of socialism, the proportion of students enrolled in technical fields has decreased and enrollment in the social sciences, as well as business and law, has increased substantially in reaction to changed labor demand (Cerych ˇ eháková, and Simonová 2007; Kogan 2008a). Apart from 1997; Mateˇju˚, R differences in acquired skills and prior ability (Van de Werfhorst and Kraaykamp 2001; Reimer, Noelke, and Kucel 2008), differences in labor market attainment of graduates from different fields of study can also be related to labor demand. The expansion of the service sector in the course of economic transformation should have raised the demand for social sciences, such as business administration, which were underdeveloped during

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socialism (Gerber and Schaefer 2004). In contrast, declines in industrial production should have diminished the labor market chances for people in technical fields, such as engineering. Different labor market success of tertiary graduates from academicoriented versus labor-market-oriented institutions might be also related to differences in the fields of study offered (Van de Werfhorst 2004; Shwed and Shavit 2006). Traditional universities usually allow students to choose from a variety of disciplines. In contrast, post-secondary vocational courses and vocational colleges, especially if they are privately owned, focus on a limited range of programs in more-lucrative fields with low instructional expenditures in order to maximize revenue. In this case, labor market differences for graduates of institutions offering academic research-oriented programs versus institutions offering applied labor-market-oriented programs should be diminished once fields of study are taken into account. Duration, Quality, and Organization of the Study Programs Another salient feature of post-secondary programs is the differences in their duration, which, although an important variable, is sometimes neglected. According to human capital theory, a longer duration of instruction should increase the amount of skills students can acquire in schools and, thus, improve their labor market chances. Mastering higher education programs of long duration might also signal higher motivation and abilities to employers, who reward these signals with better job offers. For example, post-secondary vocational school (about one to three years) and vocational college (about two to four years) programs are shorter in their duration than academic research-oriented, one-cycle university programs (about four to six years). In sequentially organized university programs, bachelor studies usually last three to four years, while master programs add another one or two years. Specifically occupationally oriented programs vary in length across countries, which might explain country differences in their relative performances. Treating all time spent in education equally, however, neglects the possibility that time in some institutional settings might have different value from that spent in other settings (Hanushek 1986; Sørensen and Morgan 2000). The quality of learning instruction is mainly determined by learning inputs, such as teaching quality (education and experience of lecturers) and institutional organization (class size and administrative expenditures).

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45

Using high-quality resources, spending more time on a task, and drawing on effective teaching strategies should increase student learning (Card and Krueger 1992; Gamoran, Secada, and Marrett 2000). Higher-quality programs should also attract more-able students (Gerber and Cheung 2008), which amplifies the positive learning effects. If there is a positive interaction between duration and quality of instruction, differences between postsecondary programs of different duration should be even more pronounced. Higher education dropouts are another phenomenon that creates differences in the duration of higher education attendance. Apart from not completing the full curricular work, dropping out from a program may signal to employers a lack of skills, in particular noncognitive skills such as perseverance and motivation (Heckman and Rubinstein 2001). Unfortunately, it is often difficult to empirically distinguish dropouts who left education early because they obtained an attractive job offer (which would result in fast labor market integration of dropouts and no status penalties) from those who lacked ability or motivation to complete higher education (which may result in slower labor market integration and possibly lowerstatus jobs compared to completers). Finally, a specific institutional feature in CEE is the differentiation between part-time (evening or distance-learning) and full-time study programs, where the latter may permit more learning (Gerber and Schaefer 2004). Part-time education is a path left open for youth least inclined toward time-consuming academic studies and/or for those who are already employed and thus have resources to pay the fees but also less time to pursue full-time education. Hence, many part-time students already have a first job that they keep after graduation, which exempts them from a long job search process. However, due to the double burden of work and studies, the time of skill instruction should be lower in part-time organized studies, which should translate into lower occupational status. Student Allocation, Openness, and Marketization Higher education institutions, programs, and study arrangements may differ with respect to their openness and, thus, the social selectivity and compositional differences between their students. Education providers often restrict access to their institutions, programs, and study arrangements while eligible students may self-select into those. In general, positively selected students, in terms of ability and motivation, guarantee better labor

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market outcomes from a skill production perspective and as a result of peer effects. From a strict signaling perspective (Spence 1973), highly selective institutions do not contribute to skill accumulation; they work purely as sorting mechanisms that award certificates as signals to employers of people with higher preexisting skills. In general, we can distinguish three selfselection and sorting mechanisms with respect to higher education in CEE. First, if entry into a university depends on cultural and economic family resources, more lower-ability students from advantaged families are admitted in the course of educational expansion, while higher-ability, lower-class students remain at a disadvantage. Thus, tertiary institutions may end up admitting more students of privileged social background, but also of lower ability. This would lead to a decline in the average ability of tertiary graduates and diminish the returns to tertiary education. Second, among higher education students, another selection mechanism is at work allocating the students to different institutions and programs. If there are more vacant positions in a second-tier sector with labor-market-oriented programs, weak students have incentives to choose these tracks, because the investment costs are lower. Market-oriented vocational and short-term university programs might lower the potential costs of higher education and thus may attract eligible students from lower social backgrounds. This segmentation will further deepen if universities engage in status-seeking behavior by denying access to less-able students (Arum, Gamoran, and Shavit 2007). A similar selection mechanism occurs in sequential university systems. Access to higher cycles continues to be more selective; in other words, after completion of the first cycle, weaker bachelor graduates will enter the labor market, while more-able and moremotivated students enter the second-degree master programs. In general, the more differentiated a higher education system, the more opportunities occur within that system to divert weaker students from more-prestigious master courses. Third, selection mechanisms might occur with respect to the study arrangement within one higher education program. For example, with the marketization of higher education in CEE countries, higher education institutions admit both tuition-paying students and students receiving state financing. All of them follow identical study programs. Admission test rankings, grades from selected subjects in secondary school, or average matriculation grades are the key selection criteria determining access to

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tuition-free study places. Those who do not pass a necessary threshold enter tuition-paying regular or part-time study arrangements. Competition is much fiercer for entry into tuition-free arrangements (Gerber and Schaefer 2004). Only the highest ranked, most able candidates are sorted and selfselect into tuition-free college placements and, thus, we can expect a better labor market performance of graduates who did not pay fees compared to tuition-paying regular and part-time students. The Impact of Economic Transformation, Educational Expansion, and Diversification The accelerated expansion and differentiation of higher education in CEE countries should have been accompanied by a greater openness of the formerly exclusive tertiary education sector. Higher education institutions have to lower their admission barriers in order to fill the new vacancies. For example, more and more upper secondary vocational graduates enter post-secondary education in many CEE countries, whereas post-secondary students were largely drawn from the pool of upper general secondary school graduates during socialist times. Differentiation of higher education opened attractive new short-term and labor-market-oriented alternatives, particularly for students with nonacademic family backgrounds. Due to higher education differentiation that accompanied tertiary education expansion, however, a new line of social differentiation may have emerged that maintained social inequality in access to different tertiary education institutions. Analogous to educational stratification in secondary education (Shavit and Müller 2000), students from disadvantaged families may be diverted into programs that are shorter in duration and oriented toward the labor market, but of lower social status. In contrast, students from higher social backgrounds may effectively maintain their social advantage by entering the most-prestigious university master programs. The labor market prospects of graduates may also vary according to the degree of post-secondary expansion. Whereas social exclusiveness and homogeneity guaranteed successful labor market integration in the case of a small tertiary sector, it is often argued that prospects are worse in an expanded sector because of credential inflation (Müller and Shavit 1998; Gangl 2002). The enormous increase in supply of graduates in some countries might have outrun the needs of the economy, especially in times of economic crisis. Expansion and differentiation may also lead higher education

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institutions to dig deeper into the ability distribution of eligible pupils, making the pool of post-secondary graduates more heterogeneous. However, expansion might be the reaction to or be accompanied by an increasing demand for highly skilled workers, which counteracts the devaluation of tertiary degrees. With the transition to market economies, skill-biased technological change and globalization increased demand for highly educated workers at the cost of workers with primary or secondary education only (Acemoglu 2002). Specifically, the observed growth in services in the course of deindustrialization during the economic transformation process may have increased the labor demand for the highly educated in CEE. Their labor market situation should have especially improved compared to secondary vocational education graduates, because the latter group is less likely to profit from the expanding services and therefore suffered from the decline in industry jobs. The impact of overall tertiary education expansion and changes in labor demand on inequalities among post-secondary graduates may be mediated by the degree of differentiation. According to labor queue models, post-secondary graduates from short-term, vocational-oriented programs should suffer in the course of tertiary education expansion, from displacement into positions with lower status that had been filled with secondary school graduates. In contrast, graduates from selective, long-term master courses should maintain their advantages by standing at the top of the labor queue, and they should profit more from the increased demand for nonroutine cognitive, analytical, and managerial tasks owing to the academic orientation of their studies. The selection mechanisms described above should amplify these effects. Regarding the degree of diversification within tertiary education, one could argue that higher tertiary master graduates secure even stronger labor market advantages compared to their counterparts from lower non-university and lower university programs if the size of university master programs remains relatively small while lower degrees dominate. Related to this argument, one could postulate a pure system effect in terms of labor market prospects with respect to the existence of sequential university bachelor and master programs. In sequentially organized university systems, graduates from master programs are even more positively selected in terms of ability and motivation, because weaker students are diverted both into short-term non-university and short-term university bach-

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elor programs. This stronger positive selection should translate into morepronounced labor market advantages for master graduates in sequentially organized university systems. m e t hod ol o g y a n d de sig n This volume is an outcome of a multiyear, large-scale collaborative international research project. Following the tradition of other comparative research (Shavit and Blossfeld 1993; Shavit and Müller 1998; Breen 2004; Heath and Cheung 2007; Shavit, Arum, and Gamoran 2007; Blossfeld et al. 2008), national experts have prepared country studies, analyzing specific national patterns of educational attainment, transitions from school to work, and early career mobility. All analyses follow a common theoretical framework, from which precise hypotheses were derived and tested (see Chapter 1 and preceding sections). We also aimed at a high degree of standardization of samples, operationalizations, variable definitions, and statistical methods. At the same time, each country study also takes national specificities into account. This is done empirically, by using detailed national educational classifications, as well as substantively, by conducting supplementary analyses on country-specific topics of interest. The following outlines the standardized methodology underlying our empirical analyses. Data All country studies use high-quality longitudinal national data sets (see Table 2.1). We opted against cross-sectional international surveys such as the European Social Survey (ESS) or the European Union Labour Force Survey (EULFS), because the national data sets provide much more detailed information on the processes we are studying, including longitudinal information, which is essential to studying the dynamics of life-course transitions. The majority of our country studies have been carried out using retrospective life-course or school leaver surveys that were explicitly designed for the kind of analyses we completed. The Ukrainian, Serbian, and Croatian data sets are similar in questionnaire design and sample selection, because both the Ukrainian and Serbian school leaver surveys were designed and conducted under the supervision of the European Training Foundation (ETF), and the Croatian school leaver survey was strongly oriented toward this ETF design. The administrative Polish school leaver survey has

Polish School Leavers Survey

Estonian Social Survey

Youth Transition Survey in Ukraine Education and Employment Survey for Russia

Poland

Estonia

Ukraine

Russia

Hungary

Slovenia

Serbia

Croatia

Survey on School to Work Transition of Graduates and Skill Requirements in Czech Republic Survey on Educational and Employment Careers of Youth in Croatia Youth Transition Survey in Serbia Statistical Office of the Republic of Slovenia (SORS) and Employment Service of Slovenia (ESS) administrative register data General Survey of Youth

Czech Republic

1989–2007

Years of observation

retrospective youth survey retrospective school leaver survey retrospective life history study retrospective school leaver survey retrospective life history study

retrospective school leaver survey administrative register panel data

retrospective school leaver survey

1966–2005

2001–06

1980–2003

1998–2005

1990–2004

1991–2006

2001–05

2003–08

1966–84, 1985–90, 1991–99, 2000–05

1980–89, 1990–96, 1997–2003 2001–06

2000–05

1990–99, 2000–04

1990–94, 1995–98, 1999–2002, 2003–06

2001–05

2003–05, 2006–08

from 17

15–34

up to 30

up to 27

14–29

15–34

15–34

15–34

19–34

first job lasting at least 3 months

first significant job

first significant job

first job lasting at least 3 months first significant job

first significant job

first significant job

first significant job

first significant employment spell any first job

Definition of Age range first job

1989–94, 1995–2000, 15–34 2001–07

Cohorts investigated

retrospective life history