Examining the relationship between economic performance and unemployment: the case of Visegrad countries

In this paper, macroeconomic links between economic performance and labour market performance are analysed. The paper is focused on the relationship between the change in GDP and the change in the number of the unemployed labour force. Economic growth is considered to be a pathway to decrease the level of unemployment. On contrary, the economic crisis can be a potential source of growth in unemployment which could have a serious social impact. Even though the economy seems to be growing again, it may be a while before the unemployment rate begins to decline, and it may even continue rising for some time after the resumption of sustained economic growth. The study is aimed to test long-term relationship between GDP growth and unemployment. Quarterly OECD data were used for the analysis of both GDP and labour market performance. The Johansen test was applied on 1995-2010 data to examine cointegration between the number of the unemployed labour force and real gross domestic product. On the basis of the unit root test, we found that in all countries, both variables are stationary except for their first differences. Cointegration was not proved in the case of all Visegrad Group countries.