To Study or to Work? Education and Labor-Market Participation of Young People in Poland

This paper proposes Heckman probit (Heckprobit) estimates of the determinants of success in finding a job in a sample of young (age 15-30) Poles, controlling for the possible selection bias caused by excluding those in school. There is evidence of sample selection bias in the case of young men, suggesting that they use economic factors to make their educational choices more than women do. Education is an important determinant of success in the labor market. The instrumental variables used in the selection equation-the local unemployment rate, expected lifetime earnings and the opportunity cost of education-have a statistically significant impact on the probability of pursuing an education. In contrast to several previous studies relative to mature market economies, ours found that in high unemployment areas, young people prefer to seek a job rather than study. This in fact contributes to the persistence of regional unemployment.