Assessing the Probability of Employment in Greece between the 2004 Olympics and the Global Financial Crisis: The Cases of the Northern Aegean and Ionian Islands
Rodokanakis, Stavros, Vlachos, Vasileios A., International Journal of Employment Studies
The aim of the paper is to study the impact that various social and demographic characteristics had on the labour market in the Greek regions of the Northern Aegean and Ionian Islands, two well known international tourist destinations, in 2006--the year before the global financial crisis of 2007-09. The year 2006 is well after the Athens 2004 Olympics and its fiscal stimulus, and before the eruption of the financial crisis that developed into an economic and sovereign debt crisis. The changing prospects of employment in the Greek labour market can be seen even during the period of rapid economic growth and in any case before the recent debt and economic crisis of Greece.
The main questions to be answered are:
i. what are the social and demographic characteristics that increase the chances of someone in the examined population finding a job?
ii. whether University graduates face greater difficulties in finding a job than non-University degree holders; this issue is of great importance, since earlier studies (see Meghir, Ioannides & Pissarides, 1989; OECD, 1990; Iliades, 1995; IN.E./GSEE-ADEDY, 1999; Katsikas, 2005) have shown this peculiarity in the Greek labour market.
iii. the prospects of young people in the labour market.
Human capital theory, which underpins many of the important developments in modern economics and provides one of the main explanations for wage and salary differentials by age and occupation is tested, and the uneven incidence of unemployment by skill (education and training). Whether the more educated a person is, the higher the probability of his or her finding a job is examined; the impact of educational level on earnings could not be examined, because this kind of information does not exist in the questionnaire of the Greek Labour Force Survey (LFS).
Previous labour market research for Greece (apart from other studies by the authors of this paper) was based on qualitative research and LFS aggregated data. The analysis of investigating the unemployment risk in the Greek labour market--at Nomenclature of Territorial Units for Statistics (NUTS) 2 level--is based on the micro-data of the Greek LFS. The access to the individual anonymous records of the Greek LFS was not allowed to researchers until the summer of 2005, due to the Data Protection Act.
The article starts by discussing human capital theory and the problem of youth unemployment. Then the article assesses unemployment levels in Greece in the two NUTS-2 regions under examination and in the EU as a whole. The relationship between unemployment and educational level in Greece and the rest of the EU is then discussed, together with some macroeconomic data for Greece and the two regions. A logit model for the year 2006 follows--based on micro-data from the Greek LFS--for the two regions. The article concludes with the impact of the social and demographic characteristics on employment probability in the two regions, ending with some general comments on the merit and value of this study.
HUMAN CAPITAL THEORY
During the late 1950s and early 1960s the current neoclassical theory of the labour market emerged with the development of human capital theory. Gary Becker (1964, 1975) published Human Capital, in which he developed a theory of human capital formation and analysed the rate of return to investment in education and training. However, investment in human capital remains a controversial issue (Woodhall, 1987).
Whilst the human capital literature has highlighted a number of productivity-related characteristics, human capital theorists give most emphasis to the importance of education and training as the main components of productivity (Blaug, 1975). Education, it is suggested, provides the basic skills of reading and writing, cognitive skills, and the "ability to learn" which will increase an individual's productivity in all jobs (general human capital), whilst vocational education, on the other hand, will increase an individual's productivity in a narrower range of jobs by providing more specific skills (specific human capital). …