As good as it gets for Romanian unemployment?

Starting  this week the Florin Citu Advisory reports will be available in English also. In the current issue of Economia 5.11.2012 we look at the unemployment numbers and ask the question: is this level structural?

The answer to the question is important as it requires different policy responses. If the current level is not structural and only reflects a low aggregate demand than policy makers have some tools to implement immediately.  However, if the current unemployment level is structural thnn the path ahead is tougher and costlier in terms of short term output and votes.

For more details on how to become a client and to receive more information about our products and services please contact us at office@florincituadvisory.com

Florin Citu is the founder of FLORIN CITU ADVISORY , an independent economic research and consulting firm. . more details will be available in English on our page soon site-ul firmei.

7 thoughts on “As good as it gets for Romanian unemployment?

  1. If unemployment is a structural phenomenon then we should experience a missallocation of (labour) resources. Therefore we should see sectors of the economy which are in need of workforce but cannot find it in sufficient numbers, while other sectors struggle with low demand and hence have to fire employees. To be onest that does not seem to be the case in Romania. All sectors of the economy have gone down, except those which are subsidized by the Government (e.g. IT sector, renewable energy, SOE)

    1. @ddr

      I am not gonna discuss the findings here, it would not be fair to clients. However, is not as much about missalocation but more about mismatch.I also, did not say that was my conclusion as I merely asked a question.

      However, you can do an estimation of the structural unemployment for the period. Then, you can look at how it changed/not changed for the periods of high and low economic growth.

      1. Understandable, posts like this one are teasers for your paid services.

        I actually did an analysis like the one you suggested 2 years ago, covering post ’89 unemployment, with data picked up mostly from INS. I had info up to the beginning of 2010. Even so the trend was clear. I would be surprised if things changed since then.

      2. @ddr
        Well, I saw a study done in 2010 by a team of local economists. There the analysis was mostly qualitative in the sense that it only interpreted the data from the INS but did not see any actual attempts to estimate structural unemployment (as unobservable as it may be :)) But I am not sure that is the study you had in mind.

      3. No, that was not what I had in mind. The work I did was not intended to be published since I am not an academic professor. Although there were clear trends emerging I was not 100% happy with the results. SOE account for a large part of the economy, and therefore when they start to fire people, the result is an increase in labor force which cannot find work in the same sector of the economy (because it is dominated by a SEO) but neither can they find it in other sectors of the economy since they ussualy do not have the necessary qualifications (e.g. mine workers from Valea Jiului). And this is a recurring phenomenon which cannot be linked with the economic cycle.

        Anyway, good luck with your reports. I really like the fact that there are other persons, besides the proffesors from ASE, involved in such work.

      4. @ddr
        ” but neither can they find it in other sectors of the economy since they ussualy do not have the necessary qualifications (e.g. mine workers from Valea Jiului). And this is a recurring phenomenon which cannot be linked with the economic cycle.” – it looks like structural unemployment to me.🙂

        Understanding the economy better is the only way to understand the implications of different economic policies for my clients. In the end is the selfish reason of having a successful company that drives me to do all the analysis.🙂

      5. I actually saw two trends, one before 2004 which is likely to reemerge in the following years, and one after 2008. But that’s enough said🙂 Good luck!

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