Poverty & Social Inclusion in the Western Balkans, Brussels, Dec 14- 15, 2010 1 “Its not that...

Poverty & Social Inclusion in the Western Balkans, Brussels, Dec 14-

15, 2010 1

“Its not that I’m a rascist, its that they are Roma”:

Roma discrimination & returns to education in South Eastern

Europe

Niall O’HigginsUniversità di Salerno

Poverty & Social Inclusion in the Western Balkans, Brussels, Dec 14-15, 2010

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Presentation Overview/Goal of the Analysis Data A few observations concerning the Roma in

the Labour Market in SEE Estimation of:

Level of education Probability of Employment Returns to education

Simulation of the effects of policy Concluding remarks

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Poverty & Social Inclusion in the Western Balkans, Brussels, Dec 14-

15, 2010

Overview/Goal Roma did very badly out of transition in terms of

Labour market outcomes – i.e. wages/incomes and employment in SEE – Question is why?

Two main explanations offered: Low Education levels Labour Market Discrimination

N.B. Two explanations are not actually mutually exclusive

Analysis seeks to throw light on the relative importance of these two explanations and draws the connection between them


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DataUNDP survey of Roma, Majority (& IDP)

populations in – at the time - 9 territorial areas of SEE

(Albania, Bosnia & Herzegovina, Bulgaria, Croatia, Kosovo, Macedonia, Montenegro, Romania and Serbia)

Not representative samples – emphasis on collecting information on Roma & Majority populations living in “similar circumstances”

So lets have a look at the Roma situation


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Unemployment rates are universally much higher for Roma than majority populations….

0

10

20

30

40

50

60

70

80

90

100

Albania Bosnia &Herzogovina

Bulgaria Croatia Kosovo Macedonia Montenegro Romania Serbia

Majority Males Majority Females Roma Males Roma Females


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And informal employment is much higher amongst the Roma…

0

10

20

30

40

50

60

70

80

Albania Bulgaria Bosnia &Herzogovina

Croatia Macedonia Serbia Montenegro Romania Kosovo

Majority Roma


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And monthly wages much lower…(National Median male wage=100)

0

10

20

30

40

50

60

70

80

90

100

Albania Bulgaria Bosnia &Herzogovina

Croatia Macedonia Serbia Montenegro Romania Kosovo

Majority Males Majority Females Roma Males Roma Females


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A Glance at Explanations

1. Low education

2. Discrimination

3. Interaction between Education & Discrimination based explanations – the returns to education


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Education – Roma clearly have much lower levels of Education than Majority populations

0

10

20

30

40

50

60

70

Incomplete Primary and less Primary or IncompleteSecondary

Secondary Tertiary

Majority Roma


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But, employment returns to education appear to be lower for the Roma

0

10

20

30

40

50

60

70

80

90

Incomplete Primary andless

Primary or IncompleteSecondary

Secondary Tertiary

Majority Roma


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And wage returns to education (apart from at tertiary level) are much lower for Roma

0.00

50.00

100.00

150.00

200.00

250.00

Incomplete Primary andless

Primary or IncompleteSecondary

Secondary Tertiary

Eur

o pe

r m

onth

.

Majority Roma


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Analysis

LIML applied to a Two equation model (for employment) and a Four Equation model (for wages)

1) Linear equation for years of schooling 2) Probit model of employment determination3) (Probit of Employee status)4) (Log-)Linear wage equation (returns to education)

For employment, 1) & 2) used For wages, 1) – 4) used Endogeneity and sample selection controlled for.

Estimates undertaken separately for Roma/Majority and males/females Age-group = 25-64

Estimates include also some personal characteristics & country fixed effects


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Also in this context the employment returns to education are much lower for Roma

Majority Males

Majority Females

Roma Males

Roma Females

Coef. Coef. Coef. Coef.

Education Years of

Schooling 0.097*** 0.177*** 0.040*** 0.012


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Decomposition of employment probability difference between Roma and majority

Males Females

% points % % points %

Differences due to:

Endowments 4 28 3 16

Coefficients 6 38 5 23

Interaction 5 34 12 62

Total Difference 15 100 20 100


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But wage returns appear to be similar for Roma and majority (n.b. in % terms)

Majority Males

Majority Females

Roma Males

Roma Females

Coef. Coef. Coef. Coef.

Education Years of

Schooling 0.084*** 0.080*** 0.085*** 0.151***


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But there is still some room for discrimination based explanations of wage differences

Males Females

Mean Roma Wage (€/month)

95.25 69.93

Mean Majority Wage (€/month)

203.88 166.10

Estimated difference 109.07 96.17

% of difference due to:

Endowments 60.6% 86.7%

Coefficients 25.9% 19.2%

Interaction 13.6% -5.8%


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Simulated effects on male expected wages of increasing education and removing

discriminationMajority Males Roma Males

Median Monthly Wage (A) €200 €97

Mean Employment Probability (B) .740 .597

E(Wage): (A) * (B) €148 €58

Change in E(Wage) from one extra year of education +€19 +€7

Change in E(Wage) from raising Roma education to 12 years - +€49

Change in E(Wage) from removing discrimination - +€27


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Concluding Remarks Evidence in favour of both low education and

discrimination based explanations of poor Labour market outcomes of Roma In particular, Roma have much lower employment returns to

education – also consistent with discrimination as a major factor – wage returns (once endogeneity/selection is controlled for) are relatively similar

Perhaps more interesting is the connection between these explanations – if returns to education are lower for Roma then it is rational for them to acquire less education

Major Policy implication – Cannot tackle education deficit without dealing with discrimination issues

Poverty & Social Inclusion in the Western Balkans, Brussels, Dec 14- 15, 2010 1 “Its not that...

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