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

Kamil Galuscak and Daniel Münich

Working Papers from Czech National Bank, Research and Statistics Department

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.

Keywords: Beveridge curve; Czech Republic; matching function; panel data; structural unemployment. (search for similar items in EconPapers)
JEL-codes: C23 E24 E32 J41 J64 (search for similar items in EconPapers)
Date: 2005-08
New Economics Papers: this item is included in nep-lab and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

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