IDEAS home Printed from https://ideas.repec.org/p/cdl/indrel/qt8sc8s1z1.html
   My bibliography  Save this paper

The Rising Strength of Management, High Unemployment and Slow Growth: Revisiting Okun’s Law

Author

Listed:
  • Reich, Michael

Abstract

Why is economic growth so slow and why are we having jobless recoveries? I address these questions here by revisiting Okun’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 Okun’s Law. Using cross-state data since 1964 I examine whether Okun’s Law has changed in response to the decline of unionism. I find that the cyclical component of Okun’s Law does not need revision and that the trend growth component has declined moderately.

Suggested Citation

  • Reich, Michael, 2012. "The Rising Strength of Management, High Unemployment and Slow Growth: Revisiting Okun’s Law," Institute for Research on Labor and Employment, Working Paper Series qt8sc8s1z1, Institute of Industrial Relations, UC Berkeley.
    • Handle: RePEc:cdl:indrel:qt8sc8s1z1
    as

    Download full text from publisher

    File URL: https://www.escholarship.org/uc/item/8sc8s1z1.pdf;origin=repeccitec
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Samuel Bentolila & Juan J. Dolado & Pierre Cahuc & Thomas Le Barbanchon, 2010. "Two-Tier Labor Markets in the Great Recession: France Vs. Spain," Working Papers wp2010_1009, CEMFI.
    2. Weisskopf, Thomas E, 1979. "Marxian Crisis Theory and the Rate of Profit in the Postwar U.S. Economy," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 3(4), pages 341-378, December.
    3. Katharine G. Abraham & James L. Medoff, 1984. "Length of Service and Layoffs in Union and Nonunion Work Groups," ILR Review, Cornell University, ILR School, vol. 38(1), pages 87-97, October.
    4. Katharine G. Abraham & Susan N. Houseman, 1995. "Labor Adjustment under Different Institutional Structures: A Case Study of Germany and the United States," Book chapters authored by Upjohn Institute researchers, in: Friedrich Buttler & Wolfgang Franz & Ronald Schettkat & David Soskice (ed.),Institutional Frameworks and Labor Market Performance: Comparative Views on the U.S. and German Economies, pages 285-315, W.E. Upjohn Institute for Employment Research.
    5. Katharine G. Abraham & Henry S. Farber, 1988. "Returns to Seniority in Union and Nonunion Jobs: A New Look at the Evidence," ILR Review, Cornell University, ILR School, vol. 42(1), pages 3-19, October.
    6. Reich, Michael, 2012. "Unemployment after the Great Recession: Why so High? What Can We Do?/El desempleo después de la Gran Recesión: ¿Por qué tan alto? ¿Qué podemos hacer?," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 30, pages 11-28, Abril.
    7. Edward S. Knotek, 2007. "How useful is Okun's law?," Economic Review, Federal Reserve Bank of Kansas City, vol. 92(Q IV), pages 73-103.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jong-seok Oh, 2018. "Changes in cyclical patterns of the USA labor market: from the perspective of nonlinear Okun’s law," International Review of Applied Economics, Taylor & Francis Journals, vol. 32(2), pages 237-258, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:cdl:indrel:qt35g487jh is not listed on IDEAS
    2. Michael Reich, 2013. "The rising strength of management, high unemployment, and slow growth; revisiting Okun's Law," Chapters, in: Jeannette Wicks-Lim & Robert Pollin (ed.), Capitalism on Trial, chapter 11, Edward Elgar Publishing.
    3. Laurence M. Ball & Daniel Leigh & Prakash Loungani, 2013. "Okun's Law: Fit at Fifty?," NBER Working Papers 18668, National Bureau of Economic Research, Inc.
    4. Holger Görg & Dennis Görlich, 2015. "Offshoring, wages and job security of temporary workers," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 151(3), pages 533-554, August.
    5. Deepankar Basu & Ramaa Vasudevan, 2013. "Technology, distribution and the rate of profit in the US economy: understanding the current crisis," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 37(1), pages 57-89.
    6. Ngoo Yee Ting & Loi Siew Ling, 2011. "Okun’S Law In Malaysia: An Autoregressive Distributed Lag (Ardl) Approach With Hodrick-Prescott (Hp) Filter," Journal of Global Business and Economics, Global Research Agency, vol. 2(1), pages 95-103, January.
    7. Abdessalem GOUIDER & Ridha NOUIRA & Faouzi SBOUI, 2018. "La relation croissance-chômage en Tunisie : validation de la spécification non linéaire de la loi d’Okun," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 47, pages 27-41.
    8. Mendieta-Muñoz, Ivan, 2015. "Is potential output growth falling?," MPRA Paper 68278, University Library of Munich, Germany.
    9. Dan Goldhaber & Roddy Theobald, 2013. "Managing the Teacher Workforce in Austere Times: The Determinants and Implications of Teacher Layoffs," Education Finance and Policy, MIT Press, vol. 8(4), pages 494-527, October.
    10. Michael Christl & Monika Köppl-Turyna & Dénes Kucsera, 2017. "Okun's Law in Austria," DANUBE: Law and Economics Review, European Association Comenius - EACO, issue 2, pages 97-110, June.
    11. Costas KARFAKIS & Constantinos KATRAKILIDIS & Eftychia TSANANA, 2014. "Does output predict unemployment? A look at Okun's law in Greece," International Labour Review, International Labour Organization, vol. 153(3), pages 421-433, September.
    12. Adama Zerbo, 2018. "A Theorem for Okun's Law," Documents de travail 180, Groupe d'Economie du Développement de l'Université Montesquieu Bordeaux IV.
    13. Robert A. Blecker, 2016. "Wage-led versus profit-led demand regimes: the long and the short of it," Review of Keynesian Economics, Edward Elgar Publishing, vol. 4(4), pages 373-390, October.
    14. David M. Kotz, 2015. "Capitalism and Forms of Capitalism," Review of Radical Political Economics, Union for Radical Political Economics, vol. 47(4), pages 541-549, December.
    15. Luojia Hu & Christopher Taber, 2011. "Displacement, Asymmetric Information, and HeterogeneousHuman Capital," Journal of Labor Economics, University of Chicago Press, vol. 29(1), pages 113-152, January.
    16. Samuel Bentolila & Juan Jose Dolado & Juan F. Jimeno, 2019. "Dual Labour Markets Revisited," CESifo Working Paper Series 7479, CESifo.
    17. David M. Kotz, 2013. "Social structures of accumulation, the rate of profit and economic crises," Chapters, in: Jeannette Wicks-Lim & Robert Pollin (ed.), Capitalism on Trial, chapter 23, Edward Elgar Publishing.
    18. Ferracuti, Elia, 2022. "Information uncertainty and organizational design," Journal of Accounting and Economics, Elsevier, vol. 74(1).
    19. Rui Pereira, 2014. "Okun’s law, asymmetries and regional spillovers: evidence from Virginia metropolitan statistical areas and the District of Columbia," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 52(2), pages 583-595, March.
    20. Pablo Agnese & Pablo Salvador, 2012. "More alike than different: the Spanish and Irish labour markets before and after the crisis," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 1(1), pages 1-24, December.
    21. Pierre Cahuc & Olivier Charlot & Franck Malherbet, 2016. "Explaining The Spread Of Temporary Jobs And Its Impact On Labor Turnover," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 57(2), pages 533-572, May.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cdl:indrel:qt8sc8s1z1. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Lisa Schiff (email available below). General contact details of provider: https://edirc.repec.org/data/irucbus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.