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Okun's Law, Development, and Demographics: Differences in the Cyclical Sensitivities of Unemployment Across Economy and Worker Groups

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  • Zidong An
  • Mr. John C Bluedorn
  • Gabriele Ciminelli

Abstract

The negative and stable relationship between an economy’s aggregate demand conditions and overall unemployment is well-documented. We show that there is a large degree of heterogeneity in the cyclical sensitivities of unemployment across worker and economy groups. First, unemployment is more than twice as sensitive to aggregate demand in advanced as in emerging market and developing economies. Second, youth’s unemployment is twice as sensitive as that of adults’. Third, women’s unemployment is significantly less sensitive to demand than men’s in advanced economies. These findings point to the highly unequal impacts of the business cycle across worker and economy groups.

Suggested Citation

  • Zidong An & Mr. John C Bluedorn & Gabriele Ciminelli, 2021. "Okun's Law, Development, and Demographics: Differences in the Cyclical Sensitivities of Unemployment Across Economy and Worker Groups," IMF Working Papers 2021/270, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2021/270
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    Cited by:

    1. Jing Li & Zidong An & Yan Wang, 2023. "On the Substitution and Complementarity between Robots and Labor: Evidence from Advanced and Emerging Economies," Sustainability, MDPI, vol. 15(12), pages 1-18, June.
    2. Mina Baliamoune, 2022. "Trade and Youth Labor Market Outcomes: Empirical Evidence and Policy Implications," Research papers & Policy papers 1945, Policy Center for the New South.

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