Decomposition of Unemployment: The Case of the Visegrad group countries

Generally, economic performance declines and the unemployment rate rises during the economic crisis. This relationship was confirmed in the past several crises. Moreover, we can decompose unemployment into several components – seasonal, cyclical and structural. The aim of the paper is to decompose unemployment and we try to estimate the rate of structural unemployment. 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. Moreover, it has decreased in these countries, except Hungary. We also compared our method with OECD estimations and we can state that these approaches lead to analogous results.