Higher Education Dropout and Youth Unemployment in Slovenia, 2011–2019: First Empirical Evidence

This paper presents the first systematic attempt to quantify higher education dropout rates in Slovenia and to examine their relationship with youth unemployment. Using annual data for the period 2011–2019, dropout rates were estimated based on project V5-2360, while youth unemployment data were obtained from Eurostat. The study applies descriptive analysis, cointegration tests and a Bayesian Vector Autoregression (BVAR) with Minnesota priors, which is well suited for small samples. Three hypotheses are tested: that dropout and unemployment are inversely related, that higher unemployment reduces dropout, and that unemployment shocks are more persistent than dropout shocks. The empirical results broadly confirm these expectations. Dropout and unemployment move in opposite directions, unemployment shocks reduce dropout, and youth unemployment displays strong hysteresis. While the small sample requires cautious interpretation, the use of Bayesian VAR provides methodologically robust inference under data constraints. Beyond its national contribution, the Slovenian case carries broader implications for small post-socialist and open economies, where structural rigidities in higher education intersect with persistent labour market challenges. The findings underline the potential for higher education to act as a countercyclical buffer and highlight the importance of coordinated education and labour market policies. By linking dropout and unemployment dynamics for the first time in Slovenia, this study contributes new evidence to the international literature and opens avenues for comparative research across European higher education systems.