Cyclical or structural? Evidence on the sources of Malaysia's unemployment during a public health crisis

Purpose This study aims to examine and compare the cyclical and structural factors influencing unemployment in Malaysia before and during the coronavirus disease pandemic. Design/methodology/approach Using monthly time-series data from January 2016 to December 2022, this study employs gross domestic product (GDP) growth and interest rates as cyclical indicators, while job vacancy (JV) and long-term unemployment (LUE) represent structural factors. The autoregressive distributed lag model is applied to distinguish short-term and long-term effects. Findings The results reveal that the cyclical factor from GDP growth significantly reduces unemployment both before and during the pandemic. Structural factors, particularly JV and LUE, played a significant role in influencing unemployment during the pandemic but were not significant in the pre-pandemic period. This underscores the significant role of structural factors in shaping labour market dynamics during a global health crisis. Originality/value This study contributes to the literature by providing empirical insights into the distinct roles of cyclical and structural factors in unemployment, particularly during a global health crisis.