scholarly journals Okun’s Law in Austria

2017 ◽  
Vol 8 (2) ◽  
pp. 97-110 ◽  
Author(s):  
Michael Christl ◽  
Monika Köppl-Turyna ◽  
Dénes Kucsera
Keyword(s):  
Growth Rate ◽  
Labor Market ◽  
Labor Force ◽  
Unemployment Rate ◽  
Gdp Growth ◽  
Okun’S Law ◽  
Okun's Law

AbstractWe estimate the classic and the dynamic variant of Okun’s law for the Austrian labor market. We find that, for recent periods, the growth rate necessary to stabilize the unemployment rate equals 2.8 percent. Moreover, we find that the rate has been growing in recent quarters due to the increasing labor force size and the effects of the crisis. The latest prediction of the employment threshold lies above 3 percent, much above forecasted GDP growth up to 2017.

scholarly journals Validity of Okun's law in Sri Lanka

2021 ◽  
Vol 2 (2) ◽  
pp. 118-133
Author(s):  
Perenparaj Nadeshan ◽  
Gnanachandran Gnanachandran
Keyword(s):  
Economic Growth ◽  
Growth Rate ◽  
Sri Lanka ◽  
Error Correction ◽  
Unemployment Rate ◽  
Gdp Growth ◽  
Okun’S Law ◽  
Correction Model ◽  
Okun's Law ◽  
The Relationship

The main goal of our research is to find out a relationship between the unemployment rate and the GDP growth rate in Sri Lanka according to Okun’s law and to know whether it can still be used as the best rule of thumb. This empirical analysis has employed the difference model, dynamic model, Error Correction Model (ECM) and Vector Error Correction Model (VECM) to validate the relationship between the unemployment rate and economic growth suggested by Okun's Law. The study is based on Quarterly data from 2004 Q1 to 2019 Q4. The results obtained through the application of varies econometric techniques such as Ordinary least square (OLS), Engel-Granger approach and cointegration procedure. The study finds that, Okun’s law is supported only by the cointegration analysis as expected by the Okun’s law in Sri Lanka. However, all other versions were reported negative Okun’s law coefficient signs while these results are not statistically significant. Overall this study is not able to found enough evidence to prove the inverse relationship between unemployment rate and economic growth rate in short run and able to found that Okun’s law can still be used as the best rule of thumb to describe the relationship between the unemployment and GDP growth in long term in Sri Lanka.

Is there a Core of Macroeconomics that Euro Area Forecasters Believe In?

2012 ◽  
Vol 13 (1) ◽  
pp. 103-115 ◽  
Author(s):  
Christian Pierdzioch ◽  
Georg Stadtmann ◽  
Jan-Christoph Rülke
Keyword(s):  
Growth Rate ◽  
Unemployment Rate ◽  
Euro Area ◽  
Inflation Rate ◽  
Phillips Curve ◽  
Practical Relevance ◽  
Okun’S Law ◽  
Macroeconomic Theory ◽  
Quantity Theory ◽  
Okun's Law

Abstract The quantity theory of money, Okun’s law, and the Phillips curve are cornerstones of macroeconomic theory. But are they also of practical relevance? Using survey data for the euro area, we found that professional economists’ forecasts are consistent with a version of the quantity theory in which forecasts of the growth rate of money supply correlate in a proportional way with forecasts of the inflation rate. We also found that forecasts of changes in the unemployment rate and forecasts of the growth rate of real output are consistent with Okun’s law. Evidence of a systematic link between forecasts of the inflation rate and forecasts of the unemployment rate, however, is not strong.

scholarly journals Examining the Relationship of Corruption with Economic Growth, Poverty and Gender Inequality Albanian Case

2014 ◽  
Vol 1 (1) ◽  
pp. 192
Author(s):  
Jonada Tafa
Keyword(s):  
Growth Rate ◽  
Labor Force ◽  
Labor Force Participation ◽  
Unemployment Rate ◽  
Participation Rate ◽  
Labor Force Participation Rate ◽  
Gdp Growth ◽  
Government Performance ◽  
Gdp Growth Rate ◽  
Per Capita

This thesis examines the relationship of corruption with economic growth, poverty and gender inequality in Albania. Albania is a developing country with a GDP growth rate of 1.6% (World Bank, 2012) and income inequality is a serious problem that government has to deal with. Regarding gender discrimination a lot of progress is made. The current government counts six female ministers in its body. Corruption in Albania is a widespread phenomenon and is found almost in every sector of life. TI CPI index ranks Albania in the 116 place out of 177 countries observed. To study this relationship a multiple regression analysis is conducted. Data for this analysis correspond to years 2000 to 2012 and is accessed from World Bank database. in this analysis CC from World Bank is the dependent variable, while FDI, GDP growth rate, GNI per Capita, Unemployment Rate, Proportion of Women in Parliamentary Positions and Women's share in Labor Force Participation Rate are the explanatory variables. The first two variables are used as indicators of economic growth. GNI per capita and Unemployment rate account for poverty, while the last two variables account for gender inequality. The results have shown that when the level of FDIs in Albania is increased government performance in control of corruption is improved. From the analysis it is understood that a decrease in unemployment rate would increase government performance in control of corruption. The results of the analysis showed that when unemployment rate increase, CC decreases. Regarding the link of corruption with GDP growth rate and GNI per capita, an inverse relationship is observed. With an increase in either GDP growth rate or GNI per capita, CC will decrease. Even the relationship with number of women in parliament and their share in labor force participation rate with corruption resulted to be negative. An increase in either proportion of women in parliamentary positions or share of them in labor force participation rate has shown to worsen government performance in control of corruption.

scholarly journals Okun’s Law and Long Term Co-Integration Analysis for OECD Countries (1987-2012)

2016 ◽  
Vol 6 (1) ◽  
pp. 39-46 ◽  
Author(s):  
Bilal Kargı
Keyword(s):  
Economic Growth ◽  
Growth Rate ◽  
Unemployment Rate ◽  
High Growth ◽  
Oecd Countries ◽  
Population Increase ◽  
Okun’S Law ◽  
Okun's Law ◽  
Term Relation

Even though, there are so many so long discussions on the relation between population increase and economic growth, today, general opinion tends to believe that there is a direct relation between population increase and economic growth. This opinion is supported by some empirical studies. Despite an economical growth caused by directly with population growth, it is known that there is a reverse relation between unemployment and growth known as Okun’s Law. This relation, suggesting that every 1 point decrease in unemployment induces a 3 point increase in growth, is tested for many countries. In this study, this hypothesis of Okun is examined and it is found to be true for selected 23 countries, even with the difference in coefficients. At the same time, long term relation between growth and unemployment is tested with the use of time series analysis and long term relation is found for 14 countries. Additionally, tests done for all 34 OECD countries showed that reversed relation between unemployment and growth is valid and they are co-integrated in long run. In this study, countries are categorized according to growth rate as “low”, “normal” and “high” and a consistent unemployment rate for countries with high growth rate could not be seen. In the case of countries with lowest growth rate, generalization that they have quite high unemployment rate can be made.

scholarly journals Is Economic Growth Working for Jobs? An Investigation of the Employment Generating Capacity of the Nigerian Economy

2020 ◽  
Vol 3 (4) ◽  
Author(s):  
Olumuyiwa Olamade ◽  
Keyword(s):  
Economic Growth ◽  
Growth Rate ◽  
Ordinary Least Squares ◽  
Gdp Growth ◽  
Okun’S Law ◽  
Okun's Law ◽  
Development Indicators ◽  
Long Run ◽  
Generating Capacity ◽  
Short Run

Nigeria has been best with the incidence of concurrent unemployment and a good run of economic growth thus calling to question the efficacy of economic growth to create jobs in the country. In this paper, we examine first whether there exists any relationship between economic growth and employment in the manner espoused by Okun’s law and then interpret the coefficient of the relationship as indicative of the capacity of the economy to translate growth into employment. Due to the unreliability of unemployment data in many developing countries we use the growth rate of employment as the dependent variable and thus expect to find a positive relationship with economic growth. A second model was specified with the growth rate of employment-to-population ratio as the dependent variable. Data were extracted from World Development Indicators and Penn’s World Table for 1961 to 2017. All the variables were level stationary from two different tests of their statistical properties. We thus estimate the Ordinary Least Squares for the short-run coefficients and explore the robustness of the ARDL to different orders of integration for the long-run form. Both establish the application of Okun’s law to Nigeria with the employment elasticity of GDP growth too small to generate discernible growth in employment. We estimated an average GDP growth of 16.22% over the long-run for the economy to keep a steady growth in employment.

scholarly journals Investigating Okun’s Law in SAARC Countries: An ARDL Approach

2020 ◽  
Author(s):  
Md. Abu Hanif ◽  
Zobayer Ahmed ◽  
Hakan Acet ◽  
Savaş Çevik
Keyword(s):  
Growth Rate ◽  
South Asian ◽  
Unemployment Rate ◽  
Negative Relationship ◽  
Okun’S Law ◽  
The South ◽  
Okun's Law ◽  
Asian Region ◽  
Long Run ◽  
South Asian Region

Abstract Purpose: The aim of this paper is to test the applicability of Okun’s law in SAARC (South Asian Association for Regional Cooperation) counties. It also intends to find the long-run association between unemployment rate and growth rate and investigate the impact of growth rate on unemployment in the South Asian Region.Design/methodology/approach: The study uses annual time series data for eight SAARC countries, from 1991 to 2015. To meet the objectives of the research, the graphical illustration of trend with descriptive statistics are followed by econometric analysis. Based on the stationarity of the variables, an autoregressive distributive lag (ARDL) model has been estimated to test the long-run relationship between unemployment and growth.Findings: The results indicate that per capita GDP negatively influences the unemployment rate in the long run only in three member countries of SAARC, namely- Afghanistan, India and Sri Lanka and in the South Asian Region in aggregate. This paper also finds a negative relationship between the growth rate and unemployment rate in Bangladesh, but this association is not statistically significant. The study doesn’t find any negative relationship between the two variables in Bhutan, Maldives, Nepal and Pakistan. The study discovers the validity of Okun’s law, but the attained Okun coefficient is less than that of the actual Okun coefficient, documented by Arthur Okun. Another substantial evidence is that the significance of the connection between the growth rate and unemployment rate varies among the SAARC countries.Research limitations: The main limitation of this paper is the unavailability of data for Afghanistan compared to other SAARC countries. Originality/value: This paper is unique as it tests the validity of Okun’s law in every member country of SAARC and as a region of South Asia. To date, no such study like this has been found in the body of literature which finds long-run relationship in all SAARC countries.JEL Classification: E24, J64, O11, O40.

scholarly journals The marriage unemployment gap

2017 ◽  
Vol 18 (1) ◽  
Author(s):  
Sekyu Choi ◽  
Arnau Valladares-Esteban
Keyword(s):  
Labor Market ◽  
Labor Force ◽  
Unemployment Rate ◽  
Crucial Role ◽  
Transition Probabilities ◽  
Demographic Changes ◽  
Men And Women ◽  
Main Driver ◽  
Married Individuals ◽  
Flow Decomposition

Abstract In this paper we document that married individuals face a lower unemployment rate than their single counterparts. We refer to this phenomenon as the marriage unemployment gap. Despite dramatic demographic changes in the labor market over the last decades, this gap has been remarkably stable both for men and women. Using a flow-decomposition exercise, we assess which transition probabilities (across labor force states) are behind this phenomenon: For men, the main driver is the higher job losing probabilities faced by single workers. For females, the participation margin also plays a crucial role.

scholarly journals Effect of Unemployment Rate on Growth Rate of Gross Domestic Product of Jordan

2019 ◽  
Vol 10 (3) ◽  
pp. 217 ◽  
Author(s):  
Khaled Abdalla Moh'd AL-Tamimi
Keyword(s):  
Economic Growth ◽  
Growth Rate ◽  
Labor Force ◽  
Unemployment Rate ◽  
Ordinary Least Squares ◽  
Total Labor Force ◽  
Independent Variable ◽  
Total Labor ◽  
Level Of Significance ◽  
Yearly Data

This study explains the effect of unemployment rate on growth rate of GDP of Jordan by depending on yearly data for the period (2009 – 2016) as unemployment rate is independent variable, and growth rate of GDP (Avariable of economic growth) as a dependent variable. This study focuses on explaining the literature both in theoretical and empirical ways of the effect of unemployment rate on growth rate of GDP, and analyzing the effect of unemployment rate on growth rate of GDP of Jordan by depending on yearly data for the period (2009 – 2016) by using the technique of ordinary least squares in version of E-views. This paper found that there are insignificant impacts of unemployment percentage to total labor force, unemployment of males percentage to male labor force, unemployment of females percentage to female labor force on growth rate of GDP of Jordan by relying on yearly data for the period 2009 to 2016 at level of significance 5%. This paper recommends testing the impacts of other obstacles in Jordan on growth rate on GDP, in order to know the variables that effect growth rate of GDP in Jordan.

scholarly journals The Output Gap and Youth Unemployment: An Analysis Based on Okun’s Law

Economies ◽  
2019 ◽  
Vol 7 (4) ◽  
pp. 108
Author(s):  
Mindaugas Butkus ◽  
Janina Seputiene
Keyword(s):  
Unemployment Rate ◽  
Youth Unemployment ◽  
Okun’S Law ◽  
Equilibrium Unemployment ◽  
Age And Gender ◽  
Okun's Law ◽  
And Gender ◽  
The Impact ◽  
Gender Specific ◽  
Potential Level

The impact of economic fluctuations on the total unemployment rate is widely studied, however, with respect to age- and gender-specific unemployment, this relationship is not so well examined. We apply the gap version of Okun’s law, aiming to estimate youth unemployment rate sensitivity to output deviations from its potential level. Additionally, we aim to compare whether men or women have a higher equilibrium unemployment rate when output is at the potential level. Contrary to most studies on age- and gender-specific Okun’s coefficients, which assume that the effect of output on unemployment is homogenous, we allow a different effect to occur, depending on the output gap’s sign (positive/negative). The focus of the analysis is on 28 EU countries over the period of 2000–2018. The model is estimated by least squares dummy variable estimator (LSDV), using Prais–Winsten standard errors. We did not find evidence that higher equilibrium unemployment rates are more typical for men or for women. The estimates clearly show the equilibrium level of youth unemployment to be well above that of total unemployment, and this conclusion holds for both genders. We assess greater youth unemployment sensitivity to negative output shock, rather than to positive output shock, but when we take confidence intervals into consideration, this conclusion becomes less obvious.

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