Effects of structural changes in intermediate use on employment using the input-output analysis and the index theory

Abstract

The aim of this paper is to investigate the effect of structural changes in intermediate use on employment in the Czech economy. We combine the input-output analysis with the index theory. For the analysis, we use input-output and employment data for the period between the years 2005 and 2015. We focus on the strength of the relationship between final use and employment through intermediate use and analyze how structural changes in intermediate use affect it. The results show that the structure of employment did not rapidly change and did not affect this relationship. However, changes in the structure of intermediate use have a significant effect on the relationship between consumption of national goods and Czech employment. We can state that Czech industries changed their intermediate consumption from goods that are highly dependent on employment to goods that are less dependent. This effect can be caused by the increasing price of manpower over time.