Government policies lead to significant decrease in unemployment rate in Israel.
The researchers estimated the Non-Accelerating Inflation Rate of Unemployment (NAIRU) for Israel from 1992 to 2013 using a state space model. They found that the NAIRU varied over time and had a significant impact on the actual unemployment rate. Policy measures to boost employment led to a decrease in the NAIRU, which in turn lowered the unemployment rate. The estimated NAIRU aligned well with the Beveridge curve, showing the expected relationship between job vacancies and unemployment.