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Okun’s Laws Differentiated by Education

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  • Askenazy, Philippe
  • Chevalier, Martin
  • Erhel, Christine

Abstract

Our aim in this note is to set Okun’s Law in a new perspective. We argue that highly educated labour should react differently to economic downturns and recoveries than lesser-educated labour. A simple model shows that when highly educated workers are engaged in long-run projects, the adjustments of their (un)employment to GDP changes become ambiguous. If the access to capital is not too affected by the cycle, these adjustements can be the opposite of the employment changes of the lesser- educated workforce. Estimations for the United States, the European Union and across Europe support the coexistence of different Okun’s laws according to educational attainment. This observation may help to explain recent puzzling macroeconomic facts.

Suggested Citation

  • Askenazy, Philippe & Chevalier, Martin & Erhel, Christine, 2015. "Okun’s Laws Differentiated by Education," CEPREMAP Working Papers (Docweb) 1514, CEPREMAP.
    • Handle: RePEc:cpm:docweb:1514
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    References listed on IDEAS

    as
    1. Michael T. Owyang & Tatevik Sekhposyan, 2012. "Okun’s law over the business cycle: was the great recession all that different?," Review, Federal Reserve Bank of St. Louis, issue Sep, pages 399-418.
    2. Stephen Machin & Kjell G. Salvanes & Panu Pelkonen, 2012. "Education And Mobility," Journal of the European Economic Association, European Economic Association, vol. 10(2), pages 417-450, April.
    3. Philippe Aghion & Philippe Askenazy & Nicolas Berman & Gilbert Cette & Laurent Eymard, 2012. "Credit Constraints And The Cyclicality Of R&D Investment: Evidence From France," Journal of the European Economic Association, European Economic Association, vol. 10(5), pages 1001-1024, October.
    4. Philippe Askenazy & Christine Erhel, 2015. "Productivity Puzzles in France," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01297703, HAL.
    5. Aghion, P. & Askenazy, P. & Berman, N. & Cette, G. & Eymard, L., 2008. "Credit Constraints and the Cyclicality of R&D Investment: Evidence from France," Working papers 198, Banque de France.
    6. Askenazy, Philippe & Erhel, Christine, 2015. "The French Productivity Puzzle," IZA Discussion Papers 9188, Institute of Labor Economics (IZA).
    7. Philippe Askenazy & Lutz Bellmann & Alex Bryson & Eva Moreno Galbis, 2016. "Productivity Puzzles Across Europe," PSE-Ecole d'économie de Paris (Postprint) halshs-01379283, HAL.
    8. Robert J. Gordon, 2010. "Okun's Law and Productivity Innovations," American Economic Review, American Economic Association, vol. 100(2), pages 11-15, May.
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    Cited by:

    1. Askenazy, Philippe & Erhel, Christine, 2015. "The French Productivity Puzzle," IZA Discussion Papers 9188, Institute of Labor Economics (IZA).
    2. Philippe Askenazy & Christine Erhel, 2017. "La productivité du travail en déclin : quels liens avec les transformations du marché du travail ?," Post-Print hal-02138346, HAL.
    3. Mindaugas Butkus & Kristina Matuzeviciute & Dovile Rupliene & Janina Seputiene, 2020. "Does Unemployment Responsiveness to Output Change Depend on Age, Gender, Education, and the Phase of the Business Cycle?," Economies, MDPI, vol. 8(4), pages 1-29, November.

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    Keywords

    Okun; low-middle educated; high-educated; business cycle;
    All these keywords.

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