Politická ekonomie
Politická ekonomie
Prague Economic Papers
University of Economics, Prague

Prague Economic Papers Vol. 26 No. 5

Evidence of Asymmetries and Nonlinearity of Unemployment and Labour Force Participation Rate in Ukraine

DOI: https://doi.org/10.18267/j.pep.633

[full text (PDF)]

Iryna Lukianenko, Marianna Oliskevych

With respect to instability and structural changes for maintaining effective functioning of economy an important issue is to study the dynamics of processes in the labour market, including labour supply and employment. Considering negative demographic trends and an acute problem of population aging in Ukraine the article presents an empirical research of the dynamics of labour force participation and unemployment rate, as well as the correlation relationship between them in various periods of time. On the basis of threshold-disturbance moving average and threshold-disturbance autoregressive models there are elicited significant asymmetric reactions of labour force participation rate, unemployment rate and productivity to positive and negative macroeconomic shocks. For modelling the asymmetric behaviour of economic activity of population there is developed a nonlinear logistic smooth transition autoregressive model. In the result of econometric analysis there is received large estimated value of slope parameter which characterizes the smoothness of transition. This indicates that the economic activity of the population in Ukraine quickly reacts to the previous changes that took place in the labour market. In times of crisis Ukrainian households increase labour supply and show increased activity in job search in order to prevent the decline of their income.

Keywords: asymmetry, labour force participation rate, labour market, LSTAR model, Ukraine, unemployment

JEL Classification: C30, E24


Abdulloev, I., Gang, I., Yun, M. (2014). Migration, Education and the Gender Gap in Labour Force Participation. European Journal of Development Research, 26(4), 509–526, https://doi.org/10.1057/ejdr.2014.27

Acemoglu, D., Scott, A. (1994). Asymmetries in the Cyclical Behaviour of UK Labour Markets. Economic Journal, 104(427), 1303–1323, https://doi.org/10.2307/2235450

Balleer, A., Gomez-Salvador, R., Turunen, J. (2014). Labour Force Participation across Europe: a Cohort-based Analys. Empirical Economics, 46(4), 1385–1415, https://doi.org/10.1007/s00181-013-0716-3

Benati, L. (2001). Some Empirical Evidence on the “Discouraged Worker” Effect. Economics

Letters, 70(3), 387–395, https://doi.org/10.1016/s0165-1765(00)00375-x

Beyer, R., Stemmer, M. (2016). Polarization or Convergence? An Analysis of Regional

Unemployment Disparities in Europe over Time. Economic Modelling, 55(C), 373–381,


Biagi, F., Lucifora, C. (2008). Demographic and Education Effect on Unemployment in Europe. Labour Economics, 15(5), 1076–1101, https://doi.org/10.1016/j.labeco.2007.09.006

Blanchard, O., Gali, J. (2007). Real Wage Rigidities and the New Keynesian Model.

Journal of Money, Credit and Banking, 39(S1), 35–65, https://doi.org/10.1111/j.15384616.2007.00015.x

Cai, L. (2010). The Relationship between Health and Labour Force Participation: Evidence from a Panel Data Simultaneous Equation Model. Labour Economics, 17(1), 77–90, https://doi.org/10.1016/j.labeco.2009.04.001

Cancelo, J. (2007). Cyclical Asymmetries in Unemployment Rates: International Evidence.

International Advances in Economic Research, 13(3), 334–346, https://doi.org/10.1007/s11294-007-9094-y

Caporale, G., Gil-alana, L. (2014). Youth Unemployment in Europe: Persistence and

Macroeconomic Determinants. Comparative Economic Studies, 56(4), 581–591, https://doi.org/10.1057/ces.2014.29

Cengiz, S., Sahin, A. (2014). Modeling Nonlinear Behavior of Labor Force Participation Rate by STAR Models: An Application for Turkey. International Journal of Economic Sciences and Applied Research, 7(1), 113–127.

Dagsvik, D., Kornstad, T., Skjerpen, T. (2013). Labor Force Participation and the Discouraged Worker Effect. Empirical Economics, 45(1), 401–433, https://doi.org/10.1007/s00181-012-0598-9

Daradkeh, Y., Guryanova, L., Klebanova, T., Kavun, S. (2012). Forecasting the Cyclical Dynamics of the Development Territories: Conceptual Approaches, Models, Experiments.

European Journal of Scientific Research, 74(1), 5–20.

Erceg, C., Andrew, T., Levin, A. (2014). Labor Force Participation and Monetary Policy

in the Wake of the Great Recession. Journal of Money, Credit and Banking, 46(S2), 3–49,


Elsby, M., Hobijn, B., Sahin, A. (2013). Unemployment Dynamics in the OECD. The Review

of Economics and Statistics, 95(2), 530–548, https://doi.org/10.1162/rest_a_00277

Elwood, S. (1998). Is the Persistence of Shocks to Output Asymmetric? Journal of Monetary

Economics, 41(2), 411–426, https://doi.org/10.1016/s0304-3932(97)00076-7

Emerson, J. (2011). Unemployment and Labor Force Participation in the United States.

Economics Letters, 111(3), 203–206, https://doi.org/10.1016/j.econlet.2011.02.022

Faria, J., Cuestas, J., Mourelle, E. (2010). Entrepreneurship and Unemployment: A Nonlinear Bidirectional Causality? Economic Modelling, 27(5), 1282–1291, https://doi.org/10.1016/j.econmod.2010.01.022

Gaddis, I., Klasen, S. (2014). Economic Development, Structural Change, and Women’s

Labor Force Participation. Journal of Population Economics, 27(3), 639–681, https://doi.org/10.1007/s00148-013-0488-2

Galbraith, J., Garcilazo, J. (2010). Inequalities, Employment and Income Convergence in Europe: Evidence from Regional Data. International Review of Applied Economics, 24(3), 359–377, https://doi.org/10.1080/02692171003701594

Hernández, R., Orraca, P. (2011). Análisis por cohortes de la participación laboral en México (1987-2009). (Cohort Analysis of Labour Participation in Mexico) El Trimestre Economico, 78(310), 343–375, https://doi.org/10.20430/ete.v78i310.37

Holmes, M., Silverstone, B. (2006). Okun’s Law, Asymmetries and Jobless Recoveries

in the United States: A Markov-switching Approach. Economics Letters, 92(2), 293–299,


Hotchkiss, J., Robertson J. (2012). Asymmetric Labour Force Participation Decisions. Applied Economics, 44(16), 2065–2073, https://doi.org/10.1080/00036846.2011.558480

Kakinaka, M., Miyamoto, H. (2012). Unemployment and Labour Force Participation in Japan.

Applied Economics Letters, 19(11), 1039–1043, https://doi.org/10.1080/13504851.2011.61

3742 Kennedy, S., Hedley, D. (2003). Educational Attainment and Labour Force

Participation in Australia. Economic Roundup, 2, 27–41.

Kolot, A. (2012). Asymmetries in Social Labour Sector Development: Manifestations, Causes

and Preconditions for Overcoming. Actual Problems of Economics, 6, 205–211.

Krasnonosova, Y., Yermolenko, O. (2013). Theoretical Aspects of Forming of Spatial Asymmetry of Placing of Labour Resources in the Economy of a Region. Business Inform, 1, 52–56.

Liu, D. (2014). The Link between Unemployment and Labor Force Participation Rates in Japan: A Regional Perspective. Japan and the World Economy, 30(C), 52–58, https://doi.org/10.1016/j.japwor.2014.02.004

Lukyanenko, I., Semko, R. (2012). Forecasting the Consequences of Economic Policy by Means

of General Equilibrium Model. Actual Problems of Economics, 1(127), 303–319.

Lutkepohl, H. et al. (2004). Applied Time Series Econometrics. Cambridge University Press.

ISBN 9780521547871.

Madsen, J., Mishra V., Smyth, R. (2008). Are Labour Force Participation Rates Non Stationary? Evidence from 130 Years for G7 Countries. Australian Economic Papers, 47(2), 166–189, https://doi.org/10.1111/j.1467-8454.2008.00339.x

Maslov, А. О. (2012). Information Asymmetry at the Labor Market and Vickrey Auction. Actual Problems of Economics, 11, 41–48.

Mishra, V., Smyth, R. (2010). Female Labor Force Participation and Total Fertility Rates

in the OECD: New Evidence from Panel Cointegration and Granger Causality

Testing. Journal of Economics and Business, 62(1), 48–64, https://doi.org/10.1016/j.jeconbus.2009.07.006

Naidu, S. (2016). Does Human Development Influence Womens Labour Force Participation Rate? Evidences from the Fiji Islands. Social Indicators Research, 127(3),

1067–1084, https://doi.org/10.1007/s11205-015-1000-z

Nucci, F., Riggi, M. (2015). Labour Force Participation Wage Rigidities and Inflation. Bank of Italy, Economic Research and International Relations Area in its Series Temi di discussione. Rome Working Papers No. 1054, https://doi.org/10.2139/ssrn.2777993

Oliskevych, M. (2015). Hysteresis, Structural Shocks and Common Trends in Labor Market:

Consequence for Ukraine. Economic Studies, 4, 120–137.

Ozerkek, Y. (2013). Unemployment and Labor Force Participation: A Panel

Cointegration Analysis for European Countries. Applied Econometrics and International

Development, 13(1), 67–76.

Papapetrou, E., Bakas, D. (2013). The Greek Labour Market during the Crisis: Unemployment,

Employment and Labour Force Participation. Economic Bulletin, 38, 65–83.

Pérez, J., Rodríguez, J., Usabiaga, C. (2003). Dynamic Analysis of the Relation between

Economic Cycle and Unemployment Cycle: a Regional Application. Investigaciones

Regionales, 2, 141–162

Petrongolo, B., Pissarides, C. (2008). The Ins and Outs of European Unemployment.

American Economic Review, 98(2), 256–262.

Salamaliki, P., Venetis, I. (2014). Smooth Transition Trends and Labor Force Participation Rates in the United States. Empirical Economics, 46(2), 629–652, https://doi.org/10.1007/s00181-013-0690-9

Senaj, M., Siebertova, Z., Svarda, N., Valachyova, J. (2016). Labour Force Participation Elasticities: the Case of Slovakia. Council for Budget Responsibility. Working Paper No. 1/2016.

State Statistics Service of Ukraine. (2014). The Labour Market. Retrieved: http://www.ukrstat.gov.ua

Tam, H. (2011). U-shaped Female Labor Participation with Economic Development: Some

Panel Data Evidence. Economics Letters, 110(2), 140–142, https://doi.org/10.1016/j.econlet.2010.11.003

Tsani, S., Paroussos, L., Fragiadakis, C., Charalambidis, I., Capros, P. (2013). Female Labour Force Participation and Economic Growth in the South Mediterranean Countries. Economics Letters, 120(2), 323–328, https://doi.org/10.1016/j.econlet.2013.04.043

Tudorache, C. (2006). Labour Force Migration Effects within European Union. Theoretica and

Applied Economics, 8(503), 91–96.

Ukil, P. (2015). Effect of Fertility on Female Labour Force Participation in the United

Kingdom. Margin: The Journal of Applied Economic Research, 9(2), 109–132, https://doi.org/10.1177/0973801014568145

Verick, S. (2014). Female Labor Force Participation in Developing Countries. IZA World of Labor, p. 87, https://doi.org/10.15185/izawol.87

Wecker, W. (1981). Asymmetric Time Series. Journal of the American Statistical Association, 76(373), 16–21, https://doi.org/10.2307/2287034

Yuldashev, O., Khakimov, O. (2011). Income Taxation and Labor Force Participation in Transition Economies: Evidence from Bulgaria, Russian Federation and Serbia. Anadolu University Journal of Social Science, 11(3), 177–198.

Zandweghe, W. (2012). Interpreting the Recent Decline in Labor Force Participation. Labour

Economic Review, Q1, 5–34.