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Abstract: The paper studies the effects of foreign (the US, the UK and the Chinese) and domestic economic policy uncertainty (EPU) shocks on unemployment in Germany, France, Italy and Spain. The analysis is run separately for the rates of adult and youth unemployment. Impulse responses derived from vector autoregressive models show that the magnitudes of the responses of the adult and youth segments of the labour market are quite different. Following an uncertainty shock, the youth unemployment rate increases significantly more than the adult unemployment rate. This is the case for France, Italy and Spain. The German labour market seems to be resistant to foreign (except Chinese) and domestic EPU shocks, while the remaining labour markets, foremost the Spanish and Italian ones, are susceptible to uncertainty shocks, especially to the US EPU shocks.
Keywords: economic policy uncertainty, youth unemployment, adult unemployment, spillover effects, impulse responses
Published in DKUM: 26.09.2023; Views: 370; Downloads: 28
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Abstract: This paper deals with the effects of economic transition and the Croatian war for independence (the Homeland War) on the stagnation and decline of economic activities, which resulted in mass unemployment. This problem is analysed in the case of Banovina, a traditionally underdeveloped region that was occupied during the war by Serb aggressor forces. A comparison of the dynamics of unemployment in Banovina, and its structural characteristics, with average trends and traits in Croatia provides insight into some of the developmental problems that burden this region.
Keywords: Banovina, war devastation, economic stagnation, unemployment, structural traits
Published in DKUM: 26.03.2018; Views: 1067; Downloads: 109
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Abstract: This paper brings to light an economic problem that frequently appears in practice: For the same variable, more alternative forecasts are proposed, yet the decision-making process requires the use of a single prediction. Therefore, a forecast assessment is necessary to select the best prediction. The aim of this research is to propose some strategies for improving the unemployment rate forecast in Romania by conducting a comparative accuracy analysis of unemployment rate forecasts based on two quantitative methods: Kalman filter and vector-auto-regressive (VAR) models. The first method considers the evolution of unemployment components, while the VAR model takes into account the interdependencies between the unemployment rate and the inflation rate. According to the Granger causality test, the inflation rate in the first difference is a cause of the unemployment rate in the first difference, these data sets being stationary. For the unemployment rate forecasts for 2010-2012 in Romania, the VAR models (in all variants of VAR simulations) determined more accurate predictions than Kalman filter based on two state space models for all accuracy measures. According to mean absolute scaled error, the dynamic-stochastic simulations used in predicting unemployment based on the VAR model are the most accurate. Another strategy for improving the initial forecasts based on the Kalman filter used the adjusted unemployment data transformed by the application of the Hodrick-Prescott filter. However, the use of VAR models rather than different variants of the Kalman filter methods remains the best strategy in improving the quality of the unemployment rate forecast in Romania. The explanation of these results is related to the fact that the interaction of unemployment with inflation provides useful information for predictions of the evolution of unemployment related to its components (i.e., natural unemployment and cyclical component).
Keywords: forecasts, accuracy, Kalman filter, Hodrick-Prescott filter, VAR models, unemployment rate
Published in DKUM: 13.11.2017; Views: 1816; Downloads: 391
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Abstract: Unemployment negatively affects the government budget and inflicts costs on the unemployed individuals as well as on the society as a whole in many ways. The direct costs of unemployment for the state budget arise due to the benefits paid out to the unemployed, and due to foregone direct and indirect taxes. On the level of an individual, nonmonetary costs are a multiple of the monetary ones, which indicates that employment plays a central role in a person’s well-being. Unemployment has a spill-over effect on the society as a whole and affects not only the unemployed, but also the employed population, particularly in the areas experiencing high unemployment rates. We take the case study of Germany, the country often used as a quintessence of how to overcome the problem of massive unemployment. Before the four Hartz reforms, which were implemented in years 2003, 2004 and 2005, Germany was characterized as the »sick man of Europe« owing to its exploding levels of unemployment, dysfunctional labor market, unsustainable social budget, and rising public debt. As the reforms were put into force, the situation in the German labor market underwent a 360° turnaround and became portrayed as the »German economic miracle«. The true effects of the reforms fully transpired in the economic and financial crisis of 2008/2009, when most countries experienced escalating unemployment rates, while Germany kept them at bay. Studies show that flexible working-time arrangements and short-time work have played a major role in inhibiting lay-offs in German companies during the recent crisis, and hence in preventing a spike in unemployment rates, which we use as one of the points that validate our Model of employment. The government subsidies made it possible for companies to reduce the working hours of their employees instead of laying them off. An important feature of the German labor market is a comparatively high percentage of part-time workers (around 25% in years 2006–2011), which also explains the low unemployment rates Germany has been recording since the reforms were introduced. The reforms cut the amount and duration of unemployment benefits, which gave the unemployed more incentives to find a job. A negative aspect of the reform may be an increased divide between the core work force and the marginal workers, which intensifies social differences and is currently on the agenda of German politics. Also some researches stress the importance of social cohesion and that the risks and opportunities in the labor market should be more evenly distributed. In the accompanying explanations to the Model of employment, some of the successful measures of Germany’s Hartz reforms may be spotted, while at the same time we avoid the »mistakes« of these reforms, thus making sure that social differences among people would narrow down upon the real-life implementation of the Model. When the number of job vacancies sharply exceeds the number of unemployed, and when there are poor prospects of new job openings in the near future, the only viable solution to the problem of unemployment is to reduce the working hours of the existing employees. The Model of employment that we develop represents a possible solution to the problem of unemployment and thus addresses the need to reduce the costs of unemployment to the unemployed individual, to the state budget, and to the society as a whole. The crux of the Model is a re-distribution of the total number of workplaces and total annual working hours among the »new actively employed population«, which comprises all persons having the potential to become or stay employed or self-employed in a given year. The model allows for a flexible arrangement of working hours – from four and up to eight hours per employee per day. Our solution will release the working hours, make them available to the currently unemployed, and hence ensure a more equitable distribution of income and work load amongst the population. In addition, as the workers will be less tired and stressed-out, their productivity will in
Keywords: unemployment, labor force, labor market, part-time employment, full-time employment, labor market flexibility, costs of unemployment, Hartz reforms
Published in DKUM: 30.08.2013; Views: 2601; Downloads: 171
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