Munich Personal RePEc Archive

Determinants of unemployment in CEE-10 economies: the role of labour market institutions and the macroeconomic environment in 2002–2012

Pesliakaite, Jurgita (2015): Determinants of unemployment in CEE-10 economies: the role of labour market institutions and the macroeconomic environment in 2002–2012.

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Abstract

The view that an institutional structure causes rigidities of the labour market is broadly accepted by policy makers. This assessment is conventionally based on unemployment theories that establish a linkage between labour market institutions and unemployment in the long run. Empirical research engages in investigation if the theoretical link between unemployment and labour market institutions could be proved to prevail. This paper provides an econometric analysis of determinants of unemployment in the long run in a set of Central and Eastern European countries for the period of 2002–2012. The evidence that institutional structure cause rigidities of the labour market and have direct effects on unemployment rate in these economies is found in this study. A set of non-structural indicators, accounted by macroeconomic shocks, also prove to have effects on the labour market outcomes. From a policy making perspective such implications suggest that structural labour market reforms and increases in the overall labour market flexibility in these economies is required to bring unemployment rates down.

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