| Abstract [eng] |
This thesis explores a paradox that occurred from the inability of dominant neoliberal theories to explain the changes that occurred in the labour markets of Central and Eastern European countries during the economic transition of 1989-2004. This thesis seeks to explain the mechanisms via which individuals adapt to labour markets affected by structural economic changes. An extreme case of transition (Lithuanian consumer electronics sector labour force) is explored. A theoretical model is constructed by relaxing two perfect market assumptions of neoclassical labour economic theory– perfect information and competition. A job search perspective is used to understand how individuals and firms overcome information asymmetries in the labour market. Job search via formal methods (i.e. those involving formal intermediaries) is costly and poorly concentrated in terms of gathering information about a labour market segment relevant to individual’s skills. Job search via informal channels (i.e. social networks) is less costly as job offers tend to appear more quickly and with less search effort. However, former co-workers tend to have better information about industry “insiders’” skills and jobs that they would fit well into. Similarly, family and friends often do not possess the “insider” information relevant to the job seeker. Due to bounded rationality, individuals tend to take unfit job offers to minimize information collection costs. A skills perspective is used to conceptualise the success of individual adaptation. The larger the extent to which old skill-sets are used in a new job, the less productivity is foregone and investment in reskilling is needed, the more successful the adaptation. Three hypotheses about the relation between job search methods and the success of adaptation are formulated. Individuals that find a job with the help of co-workers fare the best due to “insider” information (H1), those that find a job with the help of friends and family fare the worst as they do not have access to such privileged information (H3) and using formal methods may lead to all outcomes in terms of skill adaptation due to the randomness of the information acquired through formal search (H2). The empirical analysis rests on 50 in-depth interviews with former employees of the Lithuanian consumer electronics sector. Data was analysed via a Qualitative Comparative Analysis and a qualitative content analysis. The results corroborate the hypotheses to a large extent. The dominant job search tendency of individuals that use a related (largely unchanged) skill-set in a new job was obtaining job offers from former co-workers or bosses. The dominant job search tendency of individuals that had to reskill (obtain some new skills in lieu of irrelevant old skills) was to find a job via formal means. Those that experienced deskilling (using a small part of an old skill-set without obtaining new skills) tended to find jobs both via co-workers and via friends and family. An additional hypothesis is proposed to explain this unexpected tendency by taking into account the risk-averseness of an individual. Other adaptation mechanisms were also explored in light of relevant theoretical explanations. The thesis contributes to theoretical discussions of skill mismatches in labour markets by linking together the insights from work on job search methods and skills. Explaining how various adaptation mechanisms influence the skills of the labour force offers policy insights on how to reduce labour market skill mismatches. For example, encouraging “recycling” of old skills during industrial restructuring is a less costly way of transformation than reskilling of the labour force, which often takes place when new sectors are emerging. Public investment in better formal information transmission channels can also contribute to better skill matches. |
