Okun's Law: Theoretical Foundations and Revised Estimates
Okun's Law has been accepted as an empirical regularity that predicts a 3 percentage point increase in output for every 1 point reduction in the unemployment rate, but only because other facts, such as weekly hours, induced labor supply and productivity tend to rise as well. When output gaps are estimated for the U.S. economy with a production-function approach, using two different data sets for potential output and NAIRU, it is found that the marginal contribution of a 1 point reduction in unemployment is only about two-thirds percent increase in output. Changes in weekly hours and capacity utilization have independent effects on the output gap. Copyright 1993 by MIT Press.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 75 (1993)
Issue (Month): 2 (May)
|Contact details of provider:|| Web page: http://mitpress.mit.edu/journals/|
|Order Information:||Web: http://mitpress.mit.edu/journal-home.tcl?issn=00346535|
When requesting a correction, please mention this item's handle: RePEc:tpr:restat:v:75:y:1993:i:2:p:331-36. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Anna Pollock-Nelson)
If references are entirely missing, you can add them using this form.