Unemployment in Malta : an analysis of determinants of the current situation and prospects for the next decade

Abstract

The aims of the dissertation are to analyse unemployment trends in Malta since 1987, and to examine the factors that give rise to this economic phenomenon. Conventionally, unemployment is considered to be influenced by excess supply (or deficient demand) of labour. However market frictions also cause unemployment. The determinants of labour demand and labour supply are used in this dissertation to derive a reduced form equation with unemployment rate as the dependent variable. Econometric analysis is employed to ascertain the influence of factors such as wage rates, gross domestic product (GDP), demographic changes and attitudinal changes. An attempt is also made to assess the prospects for the next decade, by carrying out simulation analysis based on a number of possible scenarios. Based on these projections, a number of policy proposals are put forward.