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Producto, desempleo y la Ley de Okun en la República Dominicana
[Output, unemployment and Okun’s law in the Dominican Republic]

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  • Sánchez-Fung, José R.

Abstract

The paper investigates Okun’s Law for the Dominican Republic during the second part of the twentieth century and the first decade of the twenty first. The econometric modelling estimates an Okun coefficient implying that, on average, for every 1 percent growth in real output the unemployment rate decreases 0.5 percentage points. But recursive modelling reveals that Okun’s coefficient has being falling during the last forty years from -0.88 in 1966 to -0.5 in 2013. The drop in the magnitude of Okun’s coefficient and the inertia in the number of workers registered out of the labour supply could help in illuminating episodes of ‘jobless growth’ observed for the Dominican Republic. The analysis also reveals that the implicit average rate of real output growth consistent with stable unemployment is 4.5% per annum.

Suggested Citation

  • Sánchez-Fung, José R., 2015. "Producto, desempleo y la Ley de Okun en la República Dominicana [Output, unemployment and Okun’s law in the Dominican Republic]," MPRA Paper 63656, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:63656
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    References listed on IDEAS

    as
    1. Clark, Andrew E & Georgellis, Yannis & Sanfey, Peter, 2001. "Scarring: The Psychological Impact of Past Unemployment," Economica, London School of Economics and Political Science, vol. 68(270), pages 221-241, May.
    2. Fosu, Augustin K. (ed.), 2013. "Achieving Development Success: Strategies and Lessons from the Developing World," OUP Catalogue, Oxford University Press, number 9780199671557.
    3. José Antonio Ocampo, 2004. "Latin America's Growth and Equity Frustrations During Structural Reforms," Journal of Economic Perspectives, American Economic Association, vol. 18(2), pages 67-88, Spring.
    4. Robert J. Gordon, 1984. "Unemployment and Potential Output in the 1980s," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 15(2), pages 537-568.
    5. Alan B. Krueger & Judd Cramer & David Cho, 2014. "Are the Long-Term Unemployed on the Margins of the Labor Market?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 45(1 (Spring), pages 229-299.
    6. 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.
    7. Mary C. Daly & John G. Fernald & Òscar Jordà & Fernanda Nechio, 2014. "Interpreting deviations from Okun’s Law," FRBSF Economic Letter, Federal Reserve Bank of San Francisco.
    8. Andrew Clark & Yannis Georgellis & Peter Sanfey, 2001. "Scarring: The Psychological Impact of Past Unemployment," Economica, London School of Economics and Political Science, vol. 68(270), pages 221-241, May.
    9. Sánchez-Fung, José R., 2000. "Employment and labour markets in the Dominican Republic: an overview of the literature," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), August.
    10. Augustin Kwasi Fosu, 2013. "Achieving Development Success: Strategies and Lessons from the Developing World," WIDER Working Paper Series wp-2013-027, World Institute for Development Economic Research (UNU-WIDER).
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Okun’s Law; output; unemployment; Dominican Republic.;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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