This work splits effective unemployment into two components:
natural unemployment, and cyclical unemployment.
For that purpose, an estimation of the
stochastic cost frontier is performed. The study is
focused on the 17 autonomous communities in Spain
over the period 1982–2012. Results evidence greater
importance of the natural component as the principal
determinant of effective unemployment.When comparing
these results with those obtained applying univariate
filters, the distribution in the components of the effective
unemployment changes, increasing the importance
of cyclical unemployment. This result indicates that the
policymakers should have a greater power to implement
aggregate demand policies.
