Labour Code Effect on Exit from Unemployment: Case of Slovakia

This paper investigates the pattern of exiting unemployment in Slovakia during the period 2005 – 2009 using an alternative concept of unemployment: the self-perceived labour market status as measured by the EU-SILC dataset. In particular, we examine the effects on unemployment duration of (i) the individual characteristics, (ii) the external environment as captured by the economic cycle and labour market tightness, and (iii) the changes in labour regulations as captured by a major Labour Code reform. Applying standard survival analysis based on the Cox regression model to several inflow samples we find, among other, that higher labour market tightness at the beginning of the unemployment spell decreases the chances of finding a job. The analysis also shows that after the new Labour Code came into effect in September 2007 the unemployed have ceteris paribus lower probability of exiting unemployment by around 40%.