Employment, unemployment, participation and migration: a regional study

Abstract

Despite GDP growth rate higher than EU-15 average, labour market conditions in some Central and Eastern European countries remain under question. Indeed, the unemployment rate takes time to decrease closed to or below the European average and the participation rate remains under European standards. This non-employment is even more an issue when looking at the regional NUTS-2 level where the dispersion increased over time. We use the Blanchard et al. (1992) approach to understand the reactions of both unemployment and participation rates when a shock is imposed on employment, at the regional level. We focus on the CEECs, using a panel-VAR estimation and draw an overall comparison with EU-15 countries. We identify two adjustment channel through wages and unemployment. We find an efficient labour supply adjustment in both group. The response of the unemployment rate is slightly more persistent and the women participation is more vulnerable in the CEECs.