Labour market performance and decomposition of unemployment: the case of Visegrad group countries

Abstract

Generally, economic performance declines and the unemployment rate rises during the economic crisis. This relationship was confirmed in the past several crises. Last crisis was during 2008 and 2009. The aim of the paper is to estimate output gap and to decompose the unemployment rate. We can decompose unemployment into several components – seasonal, cyclical and structural. We focused on Visegrad Group countries (Czech Republic, Hungary, Poland and Slovakia). Quarterly data from the Eurostat database in the period between 2000 and 2012 were applied. In order to estimate the trend of the unemployment rate´s development was used Hodrick-Prescott filter. Data show that all observed economies recorded a low unemployment rate in a pre-crisis period and they had to face worsened labour market performance during and after the crisis. Our results suggest that structural component seems to be the most important component of unemployment. However, it has decreased in these countries, except Hungary.