Hidden Potential Unpacking the Causes of Labor Force Inactivity in Western Balkan Countries

Abstract

Labor force participation in the Western Balkans remains uneven, with persistent gender gaps and significant variation across countries. This study investigates the determinants of labor market activity among men and women in Albania, Bosnia and Herzegovina, Hungary, Montenegro, North Macedonia, Serbia, and Kosovo, highlighting structural, demographic, and cultural factors that shape engagement. Using data from the European Values Survey (EVS) and applying binary logistic regression models, both pooled and country-specific, the analysis examines the effects of gender, age, education, marital status, household composition, parental background, economic conditions, and gender role attitudes on the likelihood of being active in the labor market. Results show that men are consistently more likely to participate than women, with female inactivity strongly associated with unpaid care giving responsibilities and traditional gender norms. Labor market participation generally follows an inverted-U trajectory, peaking in mid-adulthood (ages 36–43) and declining thereafter. Education increases the probability of activity, though more strongly for men, while household factors such as the presence of children and spouse activity exert heterogeneous effects across countries. Parental employment at age of 14 of the respondents also influences adult activity, highlighting intergenerational effects. Country-specific analysis reveals that cultural norms, labor market structures, and social policies mediate these patterns, with Kosovo and Albania showing particularly low female engagement and Hungary exhibiting a narrower gender gap. The findings underscore the need for policies that expand access to childcare, promote flexible work arrangements, and address normative constraints to enhance labor force participation and reduce gender disparities. Overall, labor market outcomes in the region reflect the interplay of demographic, structural, and cultural factors, emphasizing the importance of tailored, context-sensitive interventions