Estimation of the natural unemployment rate in the Russian Federation, 1994-2004

To specify the problem of unemployment in Russia, we estimate the natural rate of unemployment by consecutively estimating the optimal size of the labour force and the optimal employment. For estimation of the optimal values we used a modified Hodrick-Prescott filter technique. The results show that the natural rate of unemployment in Russia during 1994-97 was stable around 13-13.5% and decreased to 7.1% by mid-2004. Moreover, before 1998 the actual unemployment was significantly lower than the natural rate and today practically equals it.