The Short-run Effects of the Croatian War on Education, Employment, and Earnings

Abstract

The recent war in Croatia (1991-1995) has had numerous adverse affects on the country and the economy as a whole. This article investigates the effect that the war had on the educational, employment, and earnings trajectories of the 1971 birth cohort of men. This birth cohort was very likely to be drafted into the armed forces. Using data from the Croatian and Slovenian Labour Force Surveys, the author treats the occurrence of the war as a natural experiment and applies the difference-in-difference framework to compare this cohort to adjacent cohorts, women, and respective cohorts in Slovenia, a neighboring country that did not experience war. The war appears to have had a negative effect on educational outcomes but a small positive effect on employment and earnings outcomes of this cohort of men. Croatia's victory in the war may provide an explanation for the observed preferential treatment of draftees in the labor market. © The Author(s) 2012.