The Rising Strength of Management, High Unemployment and Slow Growth: Revisiting Okunâ€™s Law
AbstractWhy is economic growth so slow and why are we having jobless recoveries? I address these questions here by revisiting Okunâ€™s Law, focusing not just on its cyclical component but also upon its implied estimates of trend growth. Some observers argue that the rising strength of management (falling strength of labor) since the 1980s has led to a more volatile labor market and therefore to the decay of Okunâ€™s Law. Using cross-state data since 1964 I examine whether Okunâ€™s Law has changed in response to the decline of unionism. I find that the cyclical component of Okunâ€™s Law does not need revision and that the trend growth component has declined moderately.
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Bibliographic InfoPaper provided by Institute of Industrial Relations, UC Berkeley in its series Institute for Research on Labor and Employment, Working Paper Series with number qt8sc8s1z1.
Date of creation: 26 Nov 2012
Date of revision:
Social and Behavioral Sciences; High Unemployment; Slow Growth; Okun's Law;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-12-10 (All new papers)
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