Using regional Hermin model at NUTS3 level for CSF ex-post assessment in Slovakia

Main scope of the paper is ex-post assessment of SF and CF implementation impact on eight Slovak NUTS3 regions. Assessment will be based on the regional econometric structural model HERMIN initially developed at WARR, Poland at NUTS2 level. Model framework will be based on eight (satellite) regional models that are mutually interlinked only on the level of aggregated statistical indicators. Proposed model framework is suitable for regional ex-post assessment due to its dependency mainly on generally available regional data. However, regional data are usually published with significant time delay in relation to national one, which need to be treated by ex-post analytical estimation of disaggregated data using available national data as constraints. On the other hand, due to limited links between regions only direct effect could be assessed (in terms of regions) as it is not possible to fully examine spill-over effects of growth of individual regions, resulting from SF and CF implementation, on other regions. From sectoral point of view, the HERMIN model estimates the spill-over effects between individual sectors within the given region. Therefore each regional model can predict the development of the sector also in a situation when the given sector is not affected by any direct influences (expenses of SF and CF). In case of creating new jobs, the model assumes that all jobs are filled with labour force from the given region, thus the aspect of interregional labour migration is not depicted. However, it is inevitable to realise that significant interregional labour migration occurs, for instance in the increased income of households and their consumption in another region. Additionally, using ex-ante prolongation of the model, we are able to estimate sustainability of created jobs. Applied methodology on regional level is not yet broadly utilized and paper brings new perspective for further application on regional impact assessment at European level. Regional Hermin model: See above When comparing results of ex-ante and ex-post analysis we could see two key changes in the real economy. The first one was the economic crisis causing a growth in the unemployment rate. The number of created jobs based on the implementation of SF and CF thus served to mitigate the negative impacts on the overall unemployment rate in the Slovak Republic. The other is the unequal allocation of resources over the time. In the first two years of implementation, SF and CF were drawn only minimally with a sudden growth in the second half of the programming period. This increase was resulting from efforts to implement a significant volume of available resources during period (n+2). The use of such a large volume of resources reduces the overall effectiveness of their allocation (see Radvanský and Frank, EcoMod 2009). The first mentioned factor thus decreased the output of economy of the Slovak Republic and caused a decrease in the costs and this resulted in higher effectiveness of additional resources. In other words, the actual effect of CF and CF on the economy was significantly higher and more positive than expected at the time of drafting the NSFR in 2006. The expected structure of effects on individual sectors was confirmed, though their strength is weaker in 2013. This is due to higher unemployment and lower overall created GDP resulting from more positive assumptions of ex-ante assessment, this is also reflected in lower production in the following period of years 2014-2015. Sustainability of created jobs is also the important indicator of efficiency of EU investments. At the national level, we expect the impact of SF and CF on employment to be approximately more than 110,000 (around 5% of total employment) additional jobs (compared to the situation without implementation) in 2015. From the additional jobs created approximately 40,000 represent sustainable jobs. In the market services sector, there might be created nearly 58,000 jobs in 2015, of which 24,000 jobs (42 %) are identified as sustainable. In the construction sector, there should be created around 37,000 jobs in 2015 through the SF and CF implementation. Given the nature of jobs in construction, the number of sustainable jobs compared with other sectors would be lowest (less than 15 %). The lowest number of jobs is expected to be created in the industry (around 10,000) however, in this sector there is the highest sustainability of jobs - almost 98 %.