Socioeconomic Effects of COVID-19 Pandemic: Exploring Uncertainty in the Forecast of the Romanian Unemployment Rate for the Period 2020–2023

Abstract

During the health crisis, it is vital to protect not only the critical sectors of the economy, the assets, technology, and infrastructure, but first and foremost, it is fundamental to protect jobs and workers. The current COVID-19 pandemic has had a strong impact on the labor market from three main perspectives: number of jobs (through unemployment and underemployment), quality of work (through wages, or access to social protection), and through the effects on specific groups, with a higher degree of vulnerability to unfavorable labor market outcomes. The measures aiming to reduce economic activity and social contacts lead to a reduction of labor demand and implicitly to the increase of the unemployment rate. In this context, it becomes even more relevant to be able to monitor the unemployment rate, providing relevant forecasts that include the effects of market shocks. Thus, our paper aims to forecast the unemployment rate for the period 2020–2023 using the Box-Jenkins methodology based on ARIMA models, exploring also the uncertainty based on fan charts. Although the baseline forecast offers valuable information, a good understanding of risks and uncertainties related to this forecast is equally important. The empirical results highlighted an ascending trend for unemployment rate during 2020, followed by a slow and continuous decrease until the end of 2023 with a high probability for the forecast to be above the central projection.

The COVID-19 Shock: A Bayesian Approach

“…He finds that the lower degree of employee protections in the USA and the large share of temporary workers in the Spanish economy are likely to account for the far worse outcomes in these countries. Davidescu et al (2021) used Box-Jenkins methodology based on ARIMA models to forecast the unemployment rate in Romania. The forecasted unemployment rate indicated an upward trend, reaching almost 5.15% at the beginning of 2021, with a decreasing trend for the period 2021-2023 (Davidescu et al 2021).…”

“…Davidescu et al (2021) used Box-Jenkins methodology based on ARIMA models to forecast the unemployment rate in Romania. The forecasted unemployment rate indicated an upward trend, reaching almost 5.15% at the beginning of 2021, with a decreasing trend for the period 2021-2023 (Davidescu et al 2021). Sheldon (2020) compared the current labor market situation with previous employment crises and presented the possible future trajectory of the unemployment rate in Switzerland on the basis of a previously used set of leading indicators.…”

Assessment of the Labour Market During the COVID-19 Pandemic

“…The COVID-19 pandemic has had a significant impact on the Romanian labour market in terms of three main criteria: the number of jobs (unemployment and underemployment), the quality of work (wages and access to social protection) and the impact on specific groups more vulnerable to negative labour market performance (Davidescu et al, 2021;Creţan & Light, 2020). Measures aimed at reducing labour force participation and social interaction (such as restrictions to curb the pandemic) reduce the demand for labour and indirectly contribute to higher unemployment rates.…”

“…To summarise the literature review, several aspects should be pointed out. The first one is the necessity to conduct research concerning individual regions/countries because, as the authors point out, the type of restrictions introduced, regionalisation, demographic characteristics of the population, etc., significantly affect the labour market (Beland et al, 2020;Raimo et al, 2021;Li & Kapri, 2021;Davidescu et al, 2021). Therefore, the subject of this study was Poland.…”

Tempo-Spatial Modelling of the Spread of COVID-19 in Urban Spaces

“…To this end, we focused on the socio-spatial structure of the urban system and located different variables specific to these environments to observe the spatial relationships between them. Accordingly, this model is based on a series of measures and characteristics of the population that are almost universally collected in statistics, at least in EU countries [ 8 , 9 , 10 , 11 , 12 , 13 ].…”