||The dissertation seeks to explain, why different skills formation systems have emerged in Central and Eastern Europe over the past 20 years. More specifically, it investigates, why the labor force acquires general skills in the Baltic States, Poland and Hungary, while specific skills are of utmost importance in the Czech and Slovak Republics and Slovenia? The dissertation argues that these differences can be explained by the labor market, economic and political institutions. Strong employers’ associations, high employment security, generous unemployment benefits, proportional electoral system and government stability are necessary for emergence of specific skills formation systems, while absence of these institutions is sufficient for the emergence of general skills formation systems. The dissertation employs fuzzy set techniques and robust regression to test the hypotheses empirically.