Unemployment and Public Finances - Development in the Slovak Republic and its comparison with the Czech Republic

Public finances and the government deficit are nowadays frequently consulted issues. Under search are ways to reduce the public expenditures while eliminating the associated negative effects. In this paper, we try to establish a link between the volume of public spending directed towards the labour market support and a development of the macroeconomic indicator "rate of unemployment". Using regression analysis and a simple econometric model, we outline the sensitivity in the response of the change in the level of unemployment to the level of public spending and vice versa, i.e. the change in the level of public spending to the possible change in the unemployment rate.