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Evidence of Asymmetries and Nonlinearity of Unemployment and Labour Force Participation Rate in Ukraine

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  • Iryna Lukianenko
  • Marianna Oliskevych

Abstract

With respect to instability and structural changes for maintaining effective functioning of economy an important issue is to study the dynamics of processes in the labour market, including labour supply and employment. Considering negative demographic trends and an acute problem of population aging in Ukraine the article presents an empirical research of the dynamics of labour force participation and unemployment rate, as well as the correlation relationship between them in various periods of time. On the basis of threshold-disturbance moving average and threshold-disturbance autoregressive models there are elicited significant asymmetric reactions of labour force participation rate, unemployment rate and productivity to positive and negative macroeconomic shocks. For modelling the asymmetric behaviour of economic activity of population there is developed a nonlinear logistic smooth transition autoregressive model. In the result of econometric analysis there is received large estimated value of slope parameter which characterizes the smoothness of transition. This indicates that the economic activity of the population in Ukraine quickly reacts to the previous changes that took place in the labour market. In times of crisis Ukrainian households increase labour supply and show increased activity in job search in order to prevent the decline of their income.

Suggested Citation

  • Iryna Lukianenko & Marianna Oliskevych, 2017. "Evidence of Asymmetries and Nonlinearity of Unemployment and Labour Force Participation Rate in Ukraine," Prague Economic Papers, Prague University of Economics and Business, vol. 2017(5), pages 578-601.
    • Handle: RePEc:prg:jnlpep:v:2017:y:2017:i:5:id:633:p:578-601
    DOI: 10.18267/j.pep.633
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    More about this item

    Keywords

    labour market; unemployment; labour force participation rate; asymmetry; LSTAR model; Ukraine;
    All these keywords.

    JEL classification:

    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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