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Employment Growth and Labour Elasticity in V4 Countries: Structural Decomposition Analysis

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  • Martin Hudcovský
  • Martin Lábaj
  • Karol Morvay

Abstract

In the present paper, we analyse the determinants of employment growth in V4 countries. While a standard approach relies on the parametric estimation of labour elasticity coefficients, we employ a novel approach based on structural decomposition analysis. This allows us to identify several determinants which mitigate the effects of economic growth on employment. We decompose the overall change in employment into the contribution of six factors: changes in labour productivity, changes in the import of intermediate products, changes in the structure of production, changes in the final demand structure by industries and by sectors, and a change in final demand volume. We show that besides the generally accepted influence of labour productivity growth on employment, other factors such as structural changes and changes in final demand played an important role in employment changes. These results shed some light on low labour elasticity in V4 countries and go beyond the simple labour productivity growth argument.

Suggested Citation

  • Martin Hudcovský & Martin Lábaj & Karol Morvay, 2017. "Employment Growth and Labour Elasticity in V4 Countries: Structural Decomposition Analysis," Prague Economic Papers, Prague University of Economics and Business, vol. 2017(4), pages 422-437.
    • Handle: RePEc:prg:jnlpep:v:2017:y:2017:i:4:id:623:p:422-437
    DOI: 10.18267/j.pep.623
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    References listed on IDEAS

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    1. Skolka, Jiri, 1989. "Input-output structural decomposition analysis for Austria," Journal of Policy Modeling, Elsevier, vol. 11(1), pages 45-66.
    2. de Vries, Gaaitzen J. & Erumban, Abdul A. & Timmer, Marcel P. & Voskoboynikov, Ilya & Wu, Harry X., 2012. "Deconstructing the BRICs: Structural transformation and aggregate productivity growth," Journal of Comparative Economics, Elsevier, vol. 40(2), pages 211-227.
    3. Gulay Gunluk-Senesen & Umit Senesen, 2011. "Decomposition Of Labour Demand By Employer Sectors And Gender: Findings For Major Exporting Sectors In Turkey," Economic Systems Research, Taylor & Francis Journals, vol. 23(2), pages 233-253.
    4. Kristýna Vltavská & Jaroslav Sixta, 2015. "A Historical View on the Development of Czech Economy from 1970," Prague Economic Papers, Prague University of Economics and Business, vol. 2015(1), pages 105-122.
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    Cited by:

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    2. Andrej Privara & Eva Rievajová & Mustafa Murat Yüceşahin, 2019. "Labour Market Disadvantages Faced by Migrant Workers from Czech Republic, Hungary, and Slovakia in Britain," Migration Letters, Migration Letters, vol. 16(4), pages 585-594, October.
    3. Wenbin Shao & Fangyi Li & Zhaoyang Ye & Zhipeng Tang & Wu Xie & Yu Bai & Shanlin Yang, 2019. "Inter-Regional Spillover of Carbon Emissions and Employment in China: Is It Positive or Negative?," Sustainability, MDPI, vol. 11(13), pages 1-14, July.
    4. Claudio Di Berardino & Ilaria Doganieri & Stefano D'Angelo & Gianni Onesti, 2023. "Intersectoral and intercountry linkages as drivers of employment growth in emerging economies: The case of Visegrád countries," Metroeconomica, Wiley Blackwell, vol. 74(1), pages 163-187, February.
    5. Iglika Vassileva, 2019. "Labour Intensiveness of Economic Growth in Bulgaria: Estimates, Impact of the Global Crisis and Drivers," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 3, pages 18-41.

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    More about this item

    Keywords

    structural decomposition analysis; labour elasticity; V4 countries; employment;
    All these keywords.

    JEL classification:

    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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