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Structural and Cyclical Unemployment: What Can Be Derived from the Matching Function? (in English)

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Abstract

We explain movements in the U-V (unemployment and vacancy) space – that is, the relation-ship between stocks of unemployment and job vacancies, known as the Beveridge curve – in the Czech Republic during 1995–2004. While the Beveridge curve is described by labor-market stocks, we explain shifts in the Beveridge curve using gross labor-market flows by estimating the matching function. We interpret parameter changes of the matching function during the business cycle, distinguishing cyclical and structural changes to the unemployment rate. We find that the labor-market flows are good coincidence predictors of business-cycle turning points. We show that the Czech economy suffers hysteresis (path dependency) on the labor market, which is common in many other developed market economies in the European Union.

Suggested Citation

  • Kamil Galušèák & Daniel Münich, 2007. "Structural and Cyclical Unemployment: What Can Be Derived from the Matching Function? (in English)," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 57(3-4), pages 102-125, June.
  • Handle: RePEc:fau:fauart:v:57:y:2007:i:3-4:p:102-125
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    References listed on IDEAS

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    1. Daniel Munich & Jan Svejnar & Katherine Terrell, 1998. "Worker-Firm Matching and Unemployment in Transition to a Market Economy: (Why) Were the Czechs More Successful than Others?," William Davidson Institute Working Papers Series 107, William Davidson Institute at the University of Michigan.
    2. Christopher A. Pissarides & Barbara Petrongolo, 2001. "Looking into the Black Box: A Survey of the Matching Function," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 390-431, June.
    3. Boeri, Tito & Burda, Michael C., 1996. "Active labor market policies, job matching and the Czech miracle," European Economic Review, Elsevier, vol. 40(3-5), pages 805-817, April.
    4. Lindeboom, Maarten & van Ours, Jan C & Renes, Gusta, 1994. "Matching Employers and Workers: An Empirical Analysis on the Effectiveness of Search," Oxford Economic Papers, Oxford University Press, vol. 46(1), pages 45-67, January.
    5. Burda, Michael C & Lubyová, Martina, 1995. "The Impact of Active Labour Market Policies: A Closer Look at the Czech and Slovak Republics," CEPR Discussion Papers 1102, C.E.P.R. Discussion Papers.
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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.

    More about this item

    Keywords

    Beveridge curve; Czech Republic; matching function; panel data; structural unemployment;

    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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