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Structural and Cyclical Unemployment: What Can We Derive from the Matching Function?

Author

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  • Kamil Galuscak
  • Daniel Munich

Abstract

We explain movements in the UV space, i.e. the relationship between stocks of unemployment and vacancies known as the Beveridge curve, in the Czech Republic during 1995-2004. While the Beveridge curve is described by labour market stocks, we explain shifts in the Beveridge curve using gross labour market flows by estimating the matching function. We interpret parameter changes in the matching function during the business cycle, distinguishing cyclical and structural changes in the unemployment rate. We find that labour market flows are very good coincidence predictors of turning points in the business cycle. We show that the Czech economy already suffers from the labour market hysteresis common in many other developed market economies in the EU.

Suggested Citation

  • Kamil Galuscak & Daniel Munich, 2005. "Structural and Cyclical Unemployment: What Can We Derive from the Matching Function?," Working Papers 2005/02, Czech National Bank.
    • Handle: RePEc:cnb:wpaper:2005/02
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Martin Guzi, 2014. "An Empirical Analysis of Welfare Dependence in the Czech Republic," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 64(5), pages 407-431, November.
    2. Jekaterina Dmitrijeva & Mihails Hazans, 2007. "A Stock–Flow Matching Approach to Evaluation of Public Training Programme in a High Unemployment Environment," LABOUR, CEIS, vol. 21(3), pages 503-540, September.
    3. Kamil Galuscak & Lubomir Lizal, 2011. "The Impact of Capital Measurement Error Correction on Firm-Level Production Function Estimation," Working Papers 2011/09, Czech National Bank.
    4. Ewa Gałecka-Burdziak, 2016. "Underestimated or overestimated: matching function elasticities biased due to worker inflows and outflows," Ekonomia journal, Faculty of Economic Sciences, University of Warsaw, vol. 47.
    5. Ewa Gałecka-Burdziak, 2012. "Labour market matching – the case of Poland," Bank i Kredyt, Narodowy Bank Polski, vol. 43(3), pages 31-46.
    6. Alena Bièáková & Jiøí Slaèálek & Michal Slavík, 2011. "Labor Supply after Transition: Evidence from the Czech Republic," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 61(4), pages 327-347, August.
    7. Kamil Galuscak & Jan Pavel, 2007. "Unemployment and Inactivity Traps in the Czech Republic: Incentive Effects of Policies," Working Papers 2007/9, Czech National Bank.
    8. Jan Babecky & Kamil Galuscak & Lubomir Lizal, 2011. "Firm-Level Labour Demand: Adjustment in Good Times and During the Crisis," Working Papers 2011/15, Czech National Bank.
    9. Jekaterina Dmitrijeva, 2008. "Matching and Labour Market Efficiency across Space and through EU accession: Evidence from Latvia, Estonia and Slovenia," Documents de recherche 08-05, Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne.
    10. Michal Franta, 2008. "Time Aggregation Bias in Discrete Time Models of Aggregate Duration Data," Working Papers 2008/10, Czech National Bank.
    11. Juraj Antal & Frantisek Brazdik & Jan Bruha & Martin Fukac & Adrian Pagan & Jiri Podpiera & Stanislav Polak & Yuliya Rychalovska, 2008. "CNB Economic Research Bulletin: Inflation Targeting and DSGE Models," Occasional Publications - Edited Volumes, Czech National Bank, edition 2, volume 6, number rb06/2 edited by Juraj Antal & Jan Babecky, January.
    12. Ewa Galecka-Burdziak, 2017. "Randomness or stock–flow: which mechanism describes labour market matching in Poland?," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 17(2), pages 119-135.
    13. Ewa Gałecka-Burdziak, 2012. "Elastyczność funkcji dopasowań na rynku pracy w Polsce," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 4, pages 109-126.

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    More about this item

    Keywords

    Beveridge curve; Czech Republic; matching function; panel data; structural unemployment.;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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