Structural or Cyclical? Unemployment in Latvia Since the 2008-09 Financial Crisis
Konstantin Sonin (),
Alfred Vanags and
No 9525, CEPR Discussion Papers from C.E.P.R. Discussion Papers
In terms of output decline and increase in unemployment, the economic recession in Latvia that started during the 2008-09 financial crisis was one of the most severe in the world. Using both decomposition of the unemployment rate into structural and cyclical components and Mortensen and Pissarides’ search and matching approach, we demonstrate that the changes in unemployment should be attributed primarily to cyclical, rather than structural factors; as of 2013, a large share of Latvian unemployment is still cyclical. Our results provide important implications for anti-crisis policy in Latvia and elsewhere in the world: the surge in unemployment was largely a consequence of Latvia’s austerity policy.
Keywords: Beveridge curve; cyclical unemployment; labour market matching; structural unemployment (search for similar items in EconPapers)
JEL-codes: E24 J60 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eec, nep-lab, nep-mac and nep-tra
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