Decomposition of unemployment: the case of the Visegrad group countries

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Technická Univerzita v Liberci
Technical university of Liberec, Czech Republic
Generally, output measured by real gross domestic product declines and the unemployment rate rises during the economic crisis. This relationship was confirmed in the past several crises. However, the impact of economic downturns on structural unemployment will depend on many factors. The aim of the paper is to decomposite unemployment and we try to estimate the rate of structural unemployment. We also made an effort to determine the effects of the crisis on economic performance and functioning of the labour market in the Visegrad group countries. The analysis showed considerable sensitivity of these economies to the development of the external environment (except Poland), mainly through an export channel – the most affected was an industry sector, especially automotive industry. It seems to be important to have more diversified structure of the economy, mainly the exports. Quarterly data from the Eurostat LFS database in the period between 2000 and 2014 were applied. In order to estimate the trend of the unemployment rate´s development was used Hodrick-Prescott filter. Data show that all observed economies recorded a low unemployment rate in a pre-crisis period and they had to face worsened labour market performance during and after the crisis. Our results suggest that structural component seems to be the most important component of total unemployment. Moreover, it has decreased in these countries, except Hungary. We also compared our approach with an OECD approach which is based on employment of Kalman filter. Results suggest that both methods, although they are based on different processes, lead to analogous results.
Value creation, higher education institution, stakeholder, key performance indicator, criterion weight, FARE method