Unemployment and Its Causes - Bosnia and Herzegovina

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Macroeconomics analysis of unemployment and its causes in selected economy - Bosnia and Herzegovina; Including and real-life example.

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<ul><li> 1. Unemployment And Its Causes In Selected Economy Bosnia And Mirna Babovi Herzegovina</li></ul> <p> 2. Unemployment Unemployment represents one of three major indicatiors of economic growth Types of Unemployment: Cyclical, Demand deficient unemployment, Structural, Regional, Classical, Seasonal, Frictional, Voluntary 3. Bosnia and Herzegovina independent from the former Yugoslavia on March, 3 1992 4. Bosnia and Herzegovina Current entity structure is: Federation of Bosnia and Herzegovina is divided to ten cantons. Cantons are divided to municipalities. FB&amp;H has 79 municipalities. Republic of Srpska has 62 municipalities. City of Brko is a separate administrative unit District. Entity structure high administration costs 5. Macroeconomic Instruments in Bosnia and Herzegovina Fiscal Policy - 2004 state level of fiscal authority Monetary Policy and Foreign Exchange Policy - CB prevented from actively influencing the money supply, except by setting mandatory reserves -KM exchange rate is fixed and unchangingno room for using exchange rate policy 6. Unemployment in Bosnia and Herzegovina Average net wage = 826 KM (approximately 412 Euros) January 2013 550 000 unemployed persons newest unemployment rate = 45.99 %. 7. 550 000 unemployed persons 8. Comparison 9. Labor Force Participation Female participation in labor force was 35,2 % in 2012, while male participation was 58,6%. 10. Youth Unemployment57,5 11. Causes Of Unemployment In Bosnia And Herzegovina Gray Economy (Informal Economy) post-war period generating income, savings on income taxes and social security contributions real estate, construction, commerce, tourism, tobacco and agriculture 2009 unemploymnt rate including informal economy was 18%-22% 12. Causes Of Unemployment In Bosnia And Herzegovina Recent War (1992-1995) process of recovering export performances failed to meet market needs gray economy major institutions and factories destroyed conflicts 13. Causes Of Unemployment In Bosnia And Herzegovina Poor Education System former Yugoslavian socialism system ranked 98th country in the world by HDI not fully adjusted to meet market needs 14. Example: Statistical data from 2011 are familiar. Natural rate of unemployment is 42,5%. Potential output ia 1100 mil. Calculate the IS curve and actual rate of unemployment. C=400 mil i=7.48% c=0.6 I=300 mil A=725 mil t=0.17 G=5 mil b=30 IS: Y=(A-bi) =? =1/1-c(1-t)= 1.96 Y= 1.96 * (725 30*7.48) Y= 938 mil i=0 Y=1421 Y=0 i=24.16 15. = * - * (Y/Y* * 100 100) = 42.5 0.17 * (938/1100 * 100 100) = 42.5 0.17 * (85.27 100) = 42.5 0.17 * (-14.73) = 42.5 + 2.5041 = 45.0041 Today, actual unemployment is 45.0041%. 16. Later in 2011, in order to reduce unemployment, investments increased by 30 mil.I = 30 mil A2= 725 + 30 = 755 mil Y= 1.96 * (755 30*7.48)Y= 1040 mil = 42.5 0.17 * (1040/1100 * 100 100) = 42.5 0.17 * (-5.45) = 42.5 + 0.927= 43.43 % 17. Graphical presentation </p>

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