The Relationship between Unemployment Components and Economic Growth: the Czech Republic Case
|Author:||Mgr. Vědunka Kopečná|
|Year:||2015 - summer|
|Leaders:|| PhDr. Jaromír Baxa Ph.D.
|Work type:|| Economic Theory
|Awards and prizes:|
|Abstract:||The choice of an appropriate government policy tool to promote the employment
should be done with regard to the source of unemployment. This diploma thesis
investigates structural and cyclical components of unemployment. The two
components are induced by different causes. Search and matching frictions in the
labor market are the source of the structural component. The cyclical component
is induced by a low labor productivity which induces a negative gross marginal
profit of firms. Consequently, they are obliged to cancel a portion of existing jobworker
matches. The main finding is that during a period of economic slowdown
the overall unemployment and its cyclical component rise while the structural
component declines. The dynamics of the two components is reversed during a
robust economic growth. The diploma thesis proceeds with investigating the public
hiring, a policy potentially suitable to diminish the unemployment during an
economic slowdown. The results show that the public hiring can be successfully
applied despite the private employment crowding out. A New Keynesian DSGE
model calibrated for the Czech Republic is used to model the labor market dynamics.
The results are interpreted with regard to the historic development of
the unemployment and the economic growth from 2000 to 2014.