Okun's Law: Fit at Fifty?
AbstractThis paper asks how well Okun's Law fits short-run unemployment movements in the United States since 1948 and in twenty advanced economies since 1980. We find that Okun's Law is a strong and stable relationship in most countries, one that did not change substantially during the Great Recession. Accounts of breakdowns in the Law, such as the emergence of "jobless recoveries," are flawed. We also find that the coefficient in the relationship - the effect of a one percent change in output on the unemployment rate - varies substantially across countries. This variation is partly explained by idiosyncratic features of national labor markets, but it is not related to differences in employment protection legislation.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 18668.
Date of creation: Jan 2013
Date of revision:
Note: EFG ME
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Find related papers by JEL classification:
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-01-12 (All new papers)
- NEP-HIS-2013-01-12 (Business, Economic & Financial History)
- NEP-MAC-2013-01-12 (Macroeconomics)
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- Les prÃ©visionnistes croient-ils en la loi dâOkun ?
by ? in D'un champ l'autre on 2014-02-22 18:19:00
- Michel Beine & Pauline Bourgeon & Jean-Charles Bricongne, 2013.
"Aggregate Fluctuations and International Migration,"
CESifo Working Paper Series
4379, CESifo Group Munich.
- Beine, M. & Bricongne,J-C. & Bourgeon, P., 2013. "Aggregate Fluctuations and International Migration," Working papers 453, Banque de France.
- Menzie Chinn & Laurent Ferrara & Valérie Mignon, 2013.
"Post-recession US employment through the lens of a non-linear Okun’s law,"
EconomiX Working Papers
2013-12, University of Paris West - Nanterre la Défense, EconomiX.
- Menzie D. Chinn & Laurent Ferrara & Valérie Mignon, 2013. "Post-recession US Employment through the Lens of a Non-linear Okun’s law," NBER Working Papers 19047, National Bureau of Economic Research, Inc.
- Menzie Chinn & Laurent Ferrara & Valérie Mignon, 2013. "Post-Recession US Employment through the Lens of a Non-Linear Okun's Law," Working Papers 2013-13, CEPII research center.
- Mary C. Daly & John G. Fernald & Òscar Jordà & Fernanda Nechio, 2013. "Okun’s macroscope and the changing cyclicality of underlying margins of adjustment," Working Paper Series 2013-32, Federal Reserve Bank of San Francisco.
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