Dependency Between Gross Domestic Product And Unemployment In The Czech Republic

Martina Miskolczi, Jitka Langhamrova, Tomas Fiala

Abstract


Unemployment is one of very important and closely monitored macroeconomic indicators. Unemployment rate gives indication what proportion of workforce is currently without job. In many cases prediction of unemployment would help to plan fiscal policy, programs of active employment policy and other tools of social politics. Importance of reliable prediction was proved during crisis period. Such that, modelling of labour market – employment and unemployment – may have benefits for many institutions.In the paper, there were analyzed various macroeconomic indicators in the correlation analysis, including delayed variables. Such the correlation analysis may help to build macroeconomic model using main macroeconomic variables, for example GDP, household consumption, government consumption, investments, inflation, wages, rate of employment and participation rate. It is widely accepted that GDP is one of the strongest predictor for forecasting of unemployment trend but with some delay because labour market reacts later according to legislative framework in the country. Relation between GDP and unemployment rate for the case of the Czech Republic is introduced considering time delay. Importance of GDP and GDP growth rate was not approved statistically based on real data analysis but the direction of relation was confirmed. Moreover, the regression model is proposed and estimated with the variable number of unemployed individuals as dependent variable. Forecasts and applications with two scenarios based on the regression model capture real trend of reported number of unemployed people, i.e. decreasing number of unemployed in the year 2011.


Keywords


GDP, Unemployment, Dependency, Czech Republic

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References


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