Roma Integration: Skills, Incentives, Policy Options Martin Kahanec (CEU, IZA, CELSI) Vera Messing (CEU) Klára Brožovičová (CELSI) Brian Fabo (CELSI) 1

The story 1.Education as a driver or Roma/non-Roma exclusion/employment gaps 2.Measuring the role of low education in the labor market 3.Welfare provisions and incentives to work 4.Policy options/conclusions 2

The context 3 The Great Employment Barrier UNDP/WB/EC, 2011

Minorities at greatest risk of exclusion in the EU Roma/Sinti top the list Zimmermann et al. 2008

Risk of exclusion (Policy Matrix) Zimmermann et al Roma: highest possible risk and increasing

What barriers? Zimmermann et al Education next to discrimination

The role of education 1.Segregation (O’Higgins, 2010), discrimination (Kahanec and Zimmermann, 2011) etc. lead to gaps in educational attainment 2.Educational gaps are perpetuated through intergenerational transmission (Kahanec and Yuksel, 2010) 3.Bottom line – Roma heavily overrepresented among the low educated 7

Roma/non-Roma human capital gaps 8 MaleFemale Education (years) Bad health assessment (self- reported, %)Education (years) Bad health assessment (self- reported, %) Country Romanon-RomaRoma non- RomaRoma non- RomaRomanon-Roma Albania Bosnia and Herzegovina Bulgaria Croatia Czech Rep Hungary Moldova Montenegro Romania Serbia Slovakia Macedonia UNDP/WB/EC, 2011

Low education and employment D19.1

Low education across countries EducationLowMediumHigh Bulgaria Spain Hungary Romania Slovakia Variation across the studied countries Messing et al. 2012; EU LFS 2010

The role of low education: Spain 11 Messing et al. 2012; EU LFS 2010 Low education detrimental for activity, employment, hours

The role of low education: Slovakia 12 Messing et al. 2012; EU LFS 2010 Low education very detrimental for activity and employment

The role of low education: Slovakia 13 Messing et al. 2012; EU LFS 2010 Low education worse for the young or rural; the elderly can cope better

The activity penalty: All countries 14 Messing et al. 2012; EU LFS 2010 Romania most severe, then Slovakia, Hungary and Bulgaria, Spain

The employment penalty: All countries 15 Messing et al. 2012; EU LFS 2010 Slovakia most severe, then Hungary, Bulgaria, Spain and Romania

Incentives D19.1

Does it pay to work (>50% return)? 17 ScenarioBulgariaSpainHungaryRomaniaSlovakia singleEmployed Unemployed family - 2 childrenEmployed emp/unemp Unemployed family - 5 childrenEmployed emp/unemp Unemployed single parentEmployed Unemployed Monetary incentives to work smaller with children Assume min wage, control for benefits, taxes (Messing 2012)

Does it pay to work (>33% return)? 18 ScenarioBulgariaSpainHungaryRomaniaSlovakia singleEmployed Unemployed family - 2 childrenEmployed emp/unemp Unemployed family - 5 childrenEmployed emp/unemp Unemployed single parentEmployed Unemployed Monetary incentives rather small especially for large families Assume min wage, control for benefits, taxes (Messing 2012)

Policy options

Summary Roma attain substandard labor market outcomes Education is a key factor Low education indeed leads to lower participation, employment, job quality If you are low educated (min wage), returns to working may be small or negative, especially for families with children 20

Imagine a world… A policy reflection There are a number of policies that could help to get at equal education The key appears to be breaking three vicious circles – substandard socioeconomic outcomes reinforce each other for people, families (within and over generations), and communities; – they fuel negative attitudes and perceptions, leading to ill- chosen policies; – segmentation is perpetuated through (statistical) discrimination But imagine a world where Roma educational attainment matches that of non-Roma 21

Would we be done? Research: gaps only partly due to differences in education and other variables – much of the gaps is due to differences in returns to characteristics, i.e. unequal treatment (O’Higgins 2010, Drydakis 2012, Milcher and Fischer 2011) Bottom line: Educational equality is necessary, but not sufficient 22

Martin Kahanec Tel/Fax: Department of Public Policy Central European University Nador utca 9 Budapest 1051 Hungary publicpolicy.ceu.hu 23 Read more: NEUJOBS report D19.1