scholarly journals The Relationship between Economic Growth and Unemployment Rates: Validation of Okun’s Law in Panel Context

2020 ◽  
Vol 12 (1) ◽  
pp. 33
Author(s):  
Despina Tumanoska
Keyword(s):  
Economic Growth ◽  
Average Rate ◽  
Youth Unemployment ◽  
Labor Market Institutions ◽  
Okun’S Law ◽  
Unemployment Rates ◽  
Okun's Law ◽  
Eastern European Countries ◽  
The Relationship ◽  
The Eu

This paper investigates the relationship between economic growth and unemployment rates of total and youth population in panel context. The research is in context of Okun’s Law and includes two panels: 1) Panel composed of seven South Eastern European countries and 2) Panel composed of 14 EU members’ countries whose youth unemployment rate in 2017 was below the EU average rate. The econometric analysis of the paper is based on the Autoregression Distributed Lags Model, using data for the period 1991-2017. The results suggests that there is a statistically significant relationship between the economic growth and unemployment rates in both panels, whereas the relationship is stronger in the EU panel, while the adjustment of the unemployment rates to the changes in the economic growth is faster in the SEE panel. A part of this result can be explained by the more flexible labor market institutions in the developing countries, as those that are a part of the SEE panel.

scholarly journals The Validity of Okun’s Law in North Macedonia

2019 ◽  
Vol 9 (2) ◽  
pp. 160
Author(s):  
Despina Tumanoska
Keyword(s):  
Youth Unemployment ◽  
Econometric Analysis ◽  
Gdp Growth ◽  
Okun’S Law ◽  
Unemployment Rates ◽  
Okun's Law ◽  
Long Run ◽  
Using Data ◽  
The Relationship ◽  
Auto Regression

This paper investigates the relationship between unemployment rates (youth and total) and GDP growth in North Macedonia, within the context of Okun’s Law. The econometric analysis of the paper is based on The Auto-regression Distributed Lags Model, using data for the period 1991-2017 collected from different data basis. The econometric analysis suggests that there is a statistically significant long-run relationship between the GDP growth and total unemployment in North Macedonia, at the 1% level of probability. In particular, the findings show that a 1% increase in the economic growth will lead to decrease of the total unemployment for 2.57%. No short- or long-run relationship between GDP growth and youth unemployment was detected.

scholarly journals IMPACT OF THE COVID-19 PANDEMIC ON YOUTH UNEMPLOYMENT IN THE EUROPEAN UNION

2020 ◽  
Vol 15 (1) ◽  
pp. 55-63
Author(s):  
Maya Lambovska ◽  
Boguslava Sardinha ◽  
Jaroslav Belas, Jr.
Keyword(s):  
Economic Growth ◽  
European Union ◽  
Czech Republic ◽  
Young People ◽  
Unemployment Rate ◽  
Youth Unemployment ◽  
The European Union ◽  
The Czech Republic ◽  
Unemployment Rates ◽  
The Eu

Youth unemployment is a problem in each member country of the European Union (EU). The EU seeks to alleviate this problem by implementing various programs to support young people in finding and keeping a job, thus contributing to economic growth. In 2020, the world was hit by the COVID-19 pandemic. The countries have introduced many strict measures to prevent its spread, but they have caused a significant increase in unemployment, including among young people, and thus harmed economic growth. In this paper, we analyze the unemployment of people under the age of twenty-five in the EU. We also point out how unemployment rates have increased in individual countries. This problem concerns not only countries where the youth unemployment rate had been high already, such as Greece, Spain, and Italy, but also countries with previously lower rates, for example, the Czech Republic, Netherland, Poland, and Slovenia. In the latter group of countries, the youth unemployment rate has doubled in some cases due to anti-pandemic measures. We found that the most affected countries in this regard are the aforementioned Czech Republic, where the unemployment rate at the end of 2020 rose to 2.19 times above the level at the end of 2019, and Estonia, where year-over-year youth unemployment rose by a factor of 2.5. However, unfavorable developments occurred also in Lithuania, Latvia, and Ireland. According to our results, in 2020, youth unemployment increased the least in Hungary, Italy, and Belgium. In general, however, as the situation is now much more urgent, measures to alleviate this problem need to be put in place in each country to help young people find employment and, thus, stimulate economic growth.

scholarly journals A Provincial Perspective of Nonlinear Okun’s Law for Emerging Markets: The Case of South Africa

2020 ◽  
Vol 30 (3) ◽  
pp. 59-76
Author(s):  
Kambale Kavese ◽  
Andrew Phiri
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Sensitivity Analysis ◽  
Western Cape ◽  
Okun’S Law ◽  
Okun's Law ◽  
Long Run ◽  
Short Run ◽  
The Relationship ◽  
Nonlinear Autoregressive

AbstractA provincial analysis of Okun’s law in South Africa is provided in this article from 1996 to 2016. Empirically, we rely on the nonlinear autoregressive distributive lag (N-ARDL) model whilst the Corbae-Ouliaris filter is used to extract the ‘gap’ variables required for our regression estimates. Okun’s law is found to be significant hold in the long-run exclusively for the Western Cape and Kwa-Zulu Natal provinces whereas the remaining provinces partially display significant short-run effects. Our sensitivity analysis in which panel N-ARDL estimations for all provinces finds insignificant long-run Okun effects for the country as a whole, whilst validating the relationship only in the short-run. Our study hence advises that the epicenter of policy efforts in addressing the country’s high unemployment and low economic growth dilemma should be concentrated at a provincial level.

scholarly journals The Validity of Okun’s Law, Case of Jordan

2017 ◽  
Vol 13 (28) ◽  
pp. 470
Author(s):  
Saleh Al-hosban ◽  
Mohmmad Edienat
Keyword(s):  
Economic Growth ◽  
Unemployment Rate ◽  
Negative Relationship ◽  
Economic Policies ◽  
Okun’S Law ◽  
Okun's Law ◽  
Real Gdp ◽  
Economic Methods ◽  
Econometric Tests ◽  
The Relationship

The main aim of this study is to empirically examine ,investigate and test the relationship between unemployment rate and economic growth within Jordanian economy over the period of time (1982-2016), in order to examine the validity of Okun’s law, which suggests a negative relationship between unemployment rate and economic growth, several economic methods are employed by using descriptive statistics, as well as some econometric tests, in order to analyze the variables under study . The empirical results of this study show a negative relationship between unemployment and GDP in the period 1982-2016 in Jordanian economy, which is consistent with Okun’s law. In other word, this study offered an additional empirical evidence to confirm the validity of the Okun’s law in the case of Jordan over the period 1982-2016.So any attempt to increase economic growth through some economic policies such as expansion in spending would reduce unemployment rate, where the Okun’s coefficient of GDP with respect to unemployment rate is- 0.004, such that an increase of 100 million Jordanian Dinars in the Real GDP will cause 40% decrease in the unemployment rate, which is about half percent in unemployment rate in the next. The findings of this thesis may help economists and policymakers when adapting policies in order to adjust unemployment level in the economy.

scholarly journals The Impact of Economic Growth on Gender Specific Unemployment in the EU

2015 ◽  
Vol 62 (3) ◽  
pp. 383-390 ◽  
Author(s):  
Zuzana Brincikova ◽  
Lubomir Darmo
Keyword(s):  
Economic Growth ◽  
Economic Performance ◽  
Gdp Growth ◽  
Unemployment Rates ◽  
And Gender ◽  
The Impact ◽  
The Relationship ◽  
Gender Specific ◽  
Higher Sensitivity ◽  
The Eu

Abstract The relationship between unemployment and economic growth is known as Okun´s Law. Okun´s Law is used to estimate the reaction of unemployment rate on change in GDP growth. The purpose of this paper is therefore to examine the possibly asymmetric relationship between changes in output and gender specific unemployment rates by estimating Okun´s coefficients for all countries of the EU, as well as for selected groups of the EU countries. These groups include countries with similar characteristics that differ from other groups and represent the diversity among the EU. The results confirm that male unemployment is more sensitive to changes in GDP than the unemployment of females. Furthermore, findings differ on the country´s specifics with higher sensitivity in countries with lower economic performance.

scholarly journals Economic Growth and Unemployment Rate. Case of Albania

2014 ◽  
Vol 1 (1) ◽  
pp. 217 ◽  
Author(s):  
Emirgena Nikolli
Keyword(s):  
Economic Growth ◽  
Unemployment Rate ◽  
Negative Impact ◽  
Okun’S Law ◽  
Okun's Law ◽  
The People ◽  
The Relationship ◽  
Day By Day ◽  
Percent Decrease ◽  
Rate Case

This thesis studies the relationship between the economic growth and the unemployment rate in Albania. This relation is known as Okun's law, which states that 1 percent decrease in unemployment; GDP will increase by 3 percent. Albania is one of the countries that have a sluggish development and impact of unemployment is negative in the economy of the country. At the same time the economy itself effect the employment of the people. The unemployment occurs when people are without work or seeking work. During recession there is a high unemployment rate. Even some peaks of the development like in the Total Factor Productivity, integration or infrastructure there have been recession and a bad time for the Albania too. This affected the investments, the business and by lowering their profits they are obligated to lay off employees. So the unemployment rate starts to rise up. This study takes in consideration the years from 2000 to 2013 when the unemployment was rising day by day with negative impact in the economy. This thesis introduces the general relationship between gross domestic product and unemployment. The methodology used a simple regression and takes the economic growth as dependent variable and the unemployment rate as independent. The observed result didn't explain the Okun's law for Albania. The main reason is the current crises that prevent the improvement of economic conditions.

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