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This letter demonstrates that Okun's relationship between the change in the unemployment rate and the percentage change in output can be expressed as a factorial decomposition and that, consequently, Okun's coefficient is an estimate of the employment rate plus a bias due to the omission of relevant variables. This has been ignored by previous research, which started from a simplified formulation. In the United States from 1970 to 2021, we obtained an Okun coefficient of −0.475. This value is the sum of a sign-shifted estimate of the employment rate (−0.917) plus the indirect effects of the percentage change in the output per hour worked (0.076), hours worked per employed person (0.169), participation rate (0.149), and working age population (0.048). This decomposition helps to understand the relationship between the economic growth and the unemployment rate together with all the variables that condition it. [ABSTRACT FROM AUTHOR]

In the 1950s, many economists were discussing a Greek economic miracle, second only to Japan. The 1950s followed a catastrophic decade (the 1940s) with four years of the Second World War (1940-1944) and another five of civil war (1944-1949). The 2010s were also a catastrophic decade, but this time the initiator was not a foreign army but a foreign economic crisis termed the Great Recession. As was the case in the 1940s, the end of the foreign economic invasion was followed by a civil war on how to better manage the economy. The civil war of the 1940s was between communists and non-communists, and in the 2010s, it was between Europeanists and non-Europeanists. This second civil war ended in 2019 with a victory for Europeanists. The question is whether the end of this civil war will spark another economic miracle in the 2020s similar to that of the 1950s. This issue is addressed in this paper.

Abstract This paper aims to empirically examine the relationship between GDP and unemployment in Somalia from 2000 to 2021. The study also estimates Okun's coefficient. To evaluate the association between the unemployment rate and economic growth, we employ the Hodrick–Prescott (HP) filter detrending technique, the Augmented Dickey–Fuller (ADF) test, ordinary least squares (OLS), and fully modified OLS. The findings of this study demonstrate that the series is stationary at the level. However, the results confirm a statistically insignificant negative relationship between unemployment and economic growth. Consequently, our findings suggest that Okun's law does not apply in Somalia. For robustness, we employ fully modified ordinary least squares (FMOLS), canonical cointegrating regression (CCR), and dynamic ordinary least squares (DOLS). Nevertheless, the relationship between the GDP gap and unemployment is not strong enough to be considered statistically significant, and other factors may also influence unemployment. Therefore, policies aimed at reducing unemployment should take into account various factors, including education and training, labor market regulations, and social protection measures.

The COVID-19 pandemic caused a significant decline in output, as well as economic policies aimed at mitigating the negative effects of the pandemic. Both of these factors had an impact on the labour market. This paper investigates changes in employment across groups of workers during the coronavirus pandemic in Poland and the effect of output on these changes. Firstly, it examines changes in employment growth rates across different groups of workers in 2020. Secondly, the paper analyses the impact of the coronavirus crisis on employment by comparing actual and predicted employment growth during the pandemic period (2020). Using Okun’s law, Ordinary Least Squares, and quarterly data, the elasticities of employment growth with respect to GDP growth in the pre-pandemic period (2003–2019) are calculated. These elasticities are then used to estimate projected employment growth during the pandemic. The results suggest that the total employment response to output change was relatively small, compared to the historical pattern. However, the response was unequal across groups of workers. The youngest workers, particularly women, and those with temporary employment contracts were most affected by the pandemic.

This paper aims to empirically examine the relationship between GDP and unemployment in Somalia from 2000 to 2021. The study also estimates Okun's coefficient. To evaluate the association between the unemployment rate and economic growth, we employ the Hodrick–Prescott (HP) filter detrending technique, the Augmented Dickey–Fuller (ADF) test, ordinary least squares (OLS), and fully modified OLS. The findings of this study demonstrate that the series is stationary at the level. However, the results confirm a statistically insignificant negative relationship between unemployment and economic growth. Consequently, our findings suggest that Okun's law does not apply in Somalia. For robustness, we employ fully modified ordinary least squares (FMOLS), canonical cointegrating regression (CCR), and dynamic ordinary least squares (DOLS). Nevertheless, the relationship between the GDP gap and unemployment is not strong enough to be considered statistically significant, and other factors may also influence unemployment. Therefore, policies aimed at reducing unemployment should take into account various factors, including education and training, labor market regulations, and social protection measures. [ABSTRACT FROM AUTHOR]

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This article explores the intricate relationship between economic growth and unemployment across multiple African countries, with a focus on estimating the Okun's coefficient. Data from the International Labour Office (ILO) and the World Bank's databases for 39 African nations were utilised. Two distinct methodological approaches, first differences and the Hodrick-Prescott (HP) filter, were employed to assess result robustness. Findings reveal that in most African countries, the link between GDP growth and unemployment is weak or non-existent, unlike advanced economies. This divergence underscores unique economic structures and labour dynamics in African nations, necessitating tailored approaches to address unemployment. The study also investigates factors contributing to Okun's coefficient variability in Africa, emphasising structural, demographic, and economic influences. Demographic trends, domestic market competition, and the rule of law are identified as key determinants. Consequently, policymakers are urged to prioritise measures targeting these factors to enhance job creation and economic stability. Additionally, the study highlights the role of growth volatility, particularly in Morocco, emphasising the need for policies to stabilise economic growth and mitigate unemployment fluctuations. [ABSTRACT FROM AUTHOR]

AbstractThis study investigated the relationship between unemployment rates and economic growth, known as Okun’s Law. The non-linear autoregressive distributed lags (NARDL) model was employed using quarterly time series data sampled from 2000Q1 to 2021Q4. In this model, unemployment was used as the dependent variable, whereas output, exchange rate, and consumer prices index (CPI), were used as explanatory variables, and were decomposed into positive and negative partial sums to capture asymmetry in their effects on unemployment. The findings of this study provided evidence of asymmetry in the effect of all the explanatory variables in the long-run, and a negative relationship is found between output and unemployment. However, unemployment was found more elastic to negative shocks in output than positive shocks. This implies that in the South African labour market, employers are quicker to retrench when the economy is in recession and slower to absorb when the economy is in expansion. Therefore the 6% unemployment target by 2030 appears hypothetical for South Africa, considering its current position. In this regard, this study recommends South African policymakers adjust their labour laws to be more flexible, so that employers do not substitute more labour with capital in the production process.

Maintaining optimal levels of unemployment and external debt remains a significant challenge for ensuring consistent economic growth in many developing countries. Despite persistent economic difficulties marked by political instability, high unemployment, external debt, inflation, and limited capital formation, Somalia is increasingly recognizing the importance of fostering stability, instituting economic reforms, seeking debt relief through international collaborations, and promoting inclusive growth. Therefore, this paper empirically examines the relationship between gross domestic product (GDP), unemployment, external debt, inflation, and gross capital formation in Somalia using annual data from 1991 to 2021. To attain the aim of the study, we implemented the Augmented Dickey-Fuller (ADF), vector error correction model (VECM), variance decomposition, impulse response function, and Granger causality test. The outcomes of the study present a negative relationship between unemployment and economic growth, implying the applicability of Okun’s law in Somalia. This suggests that the unemployment crisis in Somalia can be attributed to a lack of economic growth. Furthermore, the study identified that economic growth is negatively associated with inflation and external debt. Moreover, the study reveals unidirectional links between unemployment and GDP, gross capital formation and GDP, GDP and external debt, CPI and GDP, unemployment and gross capital formation, and external debt and unemployment. No causal effects were found in the other combinations of interactions. To sustain economic growth and job creation, the government must implement effective fiscal policies, create an inviting atmosphere, and have a flexible labour market policy to encourage the private sector and small businesses.

In Indonesia, excellent academic performance in Java Island is not accompanied by successful job performance. The unemployment rate for educated people on this island is higher than that for those with less education. This study aims to investigate whether economic growth reduces educated unemployment. This analysis estimates the impact of economic growth on educated unemployment, with population growth and wage rates as covariates. This study employed the Fully Modified Ordinary Least Square (FMOLS) method to investigate the relationship between economic growth and educated unemployment. This method allowed us to examine the effect of economic growth on the unemployment rates of vocational high school and college graduates. The research utilized secondary data from the Indonesian Statistic, including educated unemployment, economic growth, population growth, and minimum wages in Java, except in The Jakarta Capital Special Region. The research also collected primary data through questionnaires distributed among these graduates to validate our regression results. The results show that economic growth does not lower the unemployment of vocational high school graduates. However, economic growth reduces college graduates' unemployment. The wage rate positively impacts the unemployment rate for graduates of vocational high schools and colleges. Population growth, however, does not affect the unemployment of college graduates; instead, it positively affects the unemployment of vocational high school graduates. Primary data support the study's finding that unemployment in vocational high schools is related to students' reluctance to seek employment in other regions. Conversely, college graduates are willing to leave their area to seek a job. This research brings a unique perspective to the issue of educated unemployment by highlighting the differential impact of economic growth on vocational high school and college graduates. The results underscore the need for diverse policies to address the problem of educated unemployment effectively. [ABSTRACT FROM AUTHOR]

The understanding between labor dynamics and unions is a topic of great interest to economists and policymakers. It is known that unions can influence the working conditions of employees, either to their benefit or detriment. Using data for the G-7 countries over the period 1980–2023, the relationship between labor dynamics and unionization is examined. The association studied partly determines the collective bargaining behavior of unions. Thus, it was determined that in some cases (Italy), unions have rather rigid positions in their negotiations (positive relationship). On the contrary, unions such as the German ones show a rather flexible position (negative relationship). In addition, it was found that unions in the USA and Canada evolve towards more flexible reforms as their membership increases (positive-negative relationship). Also, the findings show how unions in some countries (Japan and UK) move from flexibility towards rigidity as they gain presence (negative-positive relationship). [ABSTRACT FROM AUTHOR]

The estimation of potential output is at the heart of the ongoing debate on the reformulation of fiscal rules in the European Union as it is an essential variable for their application. Spain constitutes a striking case, with a small and even positive output gap along with one of the highest unemployment rates in the European Union. To resolve this contradiction, in this article we estimate the potential output of the Spanish economy for the period 1987Q2–2022Q4 by means of the Updated Okun Method. Our results indicate that both the output gap and the cyclically adjusted balance are much higher than what European institutions estimate. Consequently, Spain has much more fiscal space to implement expansionary fiscal policies. [ABSTRACT FROM AUTHOR]

Research background: Unemployment is a huge topic for policymakers, scholars, and, in general, society. Historically, there have always been a lot of discussions about this phenomenon. It is already acknowledged that unemployment is closely related to economic activity: when the economy is growing, more people are employed, and when economic activity is low, employment decreases, and unemployment rises. This relation is well-researched in the framework of Okun's law. However, it is far less known how this relationship holds if international economic relations are introduced. Thus, the motivation for the research was to examine the role of international trade and foreign direct investment (FDI) on the growthunemployment nexus. Purpose of the article: To assess how trade and FDI affect growth and gender-, age-, and educational attainment level-specific unemployment relationship and on what scale this effect varies over different business cycle phases. Methods: Scientific literature review, comparative analysis, and panel regression. Findings & value added: Given the lack of research examining what effect FDI and trade have on the growth-unemployment nexus, this paper estimates modified Okun's equation on the European Union (EU) countries (EU-28, by the composition of the EU until 31/01/2020) for the period from 2000 to 2019 while incorporating international aspects that can have an impact on this nexus. Also, this study develops a specification that can be useful to monitor the potentially different effects of FDI and trade on the growth-unemployment nexus during different business cycle phases. The estimations of the panel regression for unemployment disaggregated by age, gender and education level has showed that import, export, inward FDI, and outward FDI have a negative effect on the growth-unemployment nexus. It means that with an increase in the intensity of international economic relations, the influence of gross domestic product (GDP) growth on unemployment becomes less significant. Thus, the effectiveness of expansionary fiscal policy to reduce unemployment becomes less effective in more open economies, which in the case of the EU are the smallest member states with relatively small domestic markets. [ABSTRACT FROM AUTHOR]

This objective of the study is to investigate the impact of economic growth on unemployment in Nigeria, with a view to uncovering the validity or otherwise of the Okun’s law. Both linear and non-linear specifications were considered, using quarterly data spanning 1991Q1 to 2019Q1. The study deploys a battery of cointegration techniques that account for structural breaks. The empirical result indicates that unemployment and growth are cointegrated. The estimated coefficients in both the linear and non-linear specifications show that growth is positively related to unemployment and that the impact of the latter on the former is not statistically significant. Thus, the growth experienced in the country under the period of investigation is not accompanied by reduced unemployment. Thus, whether it is the linear or the non-linear frameworks, the Okun’s law is invalid under the period of study in Nigeria. The study recommends that policies should be aimed at not merely growing the economy but deliberately targeted at sectors capable of absorbing many people such as agriculture, mining, construction and services sectors.

Purpose This study aims to examine the relationship between economic growth and unemployment in Nigeria, specifically investigating the validity of Okun's law. Design/methodology/approach The study employs both linear and non-linear specifications using quarterly data from 1991Q1 to 2019Q1. Cointegration techniques that account for structural breaks are applied. Findings Unemployment and economic growth are found to be cointegrated. Both linear and non-linear specifications show a positive relationship between growth and unemployment, but the impact of unemployment on growth is not statistically significant. The study concludes that the growth experienced in Nigeria during the study period did not lead to reduced unemployment, thus invalidating Okun's law. Research limitations/implications The study's findings are based on data up to 2019Q1 and may not reflect more recent trends. The analysis relies on the accuracy and reliability of the data sources used. Originality/value This study contributes to the understanding of the relationship between economic growth and unemployment in Nigeria, highlighting the need for policies targeting sectors with high employment potential. [ABSTRACT FROM AUTHOR]

Copyright of Journal of Economic Policy Researches / İktisat Politikası Araştırmaları Dergisi is the property of Journal of Economic Policy Researches / Iktisat Politikasi Arastirmalari Dergisi and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Maintaining optimal levels of unemployment and external debt remains a significant challenge for ensuring consistent economic growth in many developing countries. Despite persistent economic difficulties marked by political instability, high unemployment, external debt, inflation, and limited capital formation, Somalia is increasingly recognizing the importance of fostering stability, instituting economic reforms, seeking debt relief through international collaborations, and promoting inclusive growth. Therefore, this paper empirically examines the relationship between gross domestic product (GDP), unemployment, external debt, inflation, and gross capital formation in Somalia using annual data from 1991 to 2021. To attain the aim of the study, we implemented the Augmented Dickey-Fuller (ADF), vector error correction model (VECM), variance decomposition, impulse response function, and Granger causality test. The outcomes of the study present a negative relationship between unemployment and economic growth, implying the applicability of Okun's law in Somalia. This suggests that the unemployment crisis in Somalia can be attributed to a lack of economic growth. Furthermore, the study identified that economic growth is negatively associated with inflation and external debt. Moreover, the study reveals unidirectional links between unemployment and GDP, gross capital formation and GDP, GDP and external debt, CPI and GDP, unemployment and gross capital formation, and external debt and unemployment. No causal effects were found in the other combinations of interactions. To sustain economic growth and job creation, the government must implement effective fiscal policies, create an inviting atmosphere, and have a flexible labour market policy to encourage the private sector and small businesses. IMPACT STATEMENT: This study, titled "Exploring the Dynamics of Inflation, Unemployment, and Economic Growth in Somalia: A VECM Analysis," scrutinizes the intricate interconnections among essential macroeconomic variables in Somalia, utilizing data spanning from 1991 to 2021. Through the application of sophisticated econometric methodologies, the research substantiates Okun's law, revealing a negative correlation between unemployment and economic growth. Additionally, it elucidates the detrimental impacts of inflation and external debt on economic expansion. The insights garnered from this analysis are invaluable for policymakers, underscoring the imperative for effective fiscal policies and comprehensive economic reforms to stimulate private sector development and the growth of small enterprises. By addressing the critical issues of high unemployment, significant external debt, and persistent inflation, this study offers pivotal guidance for advancing sustainable economic development and ensuring stability in Somalia. [ABSTRACT FROM AUTHOR]

This study investigated the relationship between unemployment rates and economic growth, known as Okun's Law. The non-linear autoregressive distributed lags (NARDL) model was employed using quarterly time series data sampled from 2000Q1 to 2021Q4. In this model, unemployment was used as the dependent variable, whereas output, exchange rate, and consumer prices index (CPI), were used as explanatory variables, and were decomposed into positive and negative partial sums to capture asymmetry in their effects on unemployment. The findings of this study provided evidence of asymmetry in the effect of all the explanatory variables in the long-run, and a negative relationship is found between output and unemployment. However, unemployment was found more elastic to negative shocks in output than positive shocks. This implies that in the South African labour market, employers are quicker to retrench when the economy is in recession and slower to absorb when the economy is in expansion. Therefore the 6% unemployment target by 2030 appears hypothetical for South Africa, considering its current position. In this regard, this study recommends South African policymakers adjust their labour laws to be more flexible, so that employers do not substitute more labour with capital in the production process. IMPACT STATEMENT: This year 2024 marks twelve years since the National Development Plan (NDP) goals were formulated in South Africa. It is with deep sadness that the society is still characterised by deep poverty, elevated levels of crime and poor living standards. The stimulus packages employed by the South African government and policy uncertainty seem to be not working towards the direction of achieving the projected national development targets. It was necessary to conduct such an investigation to determine if the current economic experience could potentially steer South Africa towards the trajectory of achieving the NDP goals. [ABSTRACT FROM AUTHOR]

Okun's law suggests that economic growth and unemployment are negatively correlated–i.e., a 1% increase in GNP is associated with a decrease in the unemployment rate of 0.3 percentage points. However, agreement on the magnitude of this effect, the so-called Okun's coefficient, is far from consistent. Empirical findings suggest that Okun's coefficient varies for males and females, across educational attainment levels, between countries with different labor market regulations, and over recession and expansion periods. This paper is among the first attempts to jointly consider the abovementioned aspects of the heterogeneity of Okun's law. Our empirical examinations are based on data from European Union countries over the 2000–2020 period. With quarterly data, we apply time-series regressions and estimate gender-, age- and educational attainment level-specific Okun's coefficients for each country. In the second step, we run cross-country regressions to establish whether labor market regulations influence the responsiveness of unemployment to output growth. We use panel specifications and time-varying Okun's coefficients to check robustness. Our results show that straightening labor market regulation would not significantly reduce the possibilities for growth to reduce unemployment. [ABSTRACT FROM AUTHOR]

Abstract We propose a unique method of nowcasting and forecasting GDP growth based on a forward-looking measure of unemployment (FLUR) and Okun’s law that offers a number of advantages over current leading indicators of the Swiss business cycle. The following investigation, covering the period from 1991/1 to 2021/4, demonstrates that our approach outperforms an AR(1) model of GDP growth equally well as the popular Business Cycle Index of the Swiss National Bank and the KOF Barometer with respect to year-to-year growth, but less so in regard to quarter-to-quarter changes. Our findings suggest that our approach offers a reliable and useful indicator to policymakers seeking easily compiled information on the current and future course of the Swiss economy at monthly time intervals.

This paper examines the existence of Okun’s law in Algeria over the period of 1970–2020 using both the gap and differences model.

The study aims to verify the relationship between the unemployment rate and economic growth in European Union (EU) regions. As the most important macroeconomic relationship, the significance of the dependence between the labour market situation and the output growth is widely known and considered. Analysis in this research was conducted using data for 229 EU regions on the NUTS-2 level in the years 2013–2019. In order to verify the relationship between the unemployment rate and the output growth, the spatio-temporal models for pooled time series and cross-sectional data (TSCS) were estimated. The Fitted Trend and Elasticity Method of verifying Okun’s law was used in the analysis, wherein the deterministic trend factor was enriched with the spatial element. Educational attainment as the additional explanatory variable was included in the models. The neighbourhood between regions was quantified based on two criteria: (1) common border criterion – related to the possibility of population migrations, and (2) similarity of the unemployment rate criterion – related to the imitation effect in the issue of introduced rules and regulations on the labour market by regional governments. One of the hypotheses verified in the investigation is the superiority of the economic neighbourhood over the geographical neighbourhood.

AbstractThis paper aims to establish the asymmetric effects in the short and long term of cyclical output on Algeria’s unemployment rate during the period 1970–2018. To achieve this objective, the “Okun” relation was applied, relying on a NARDL model methodology in the estimation. The main results of this study are summarized as follows. In the long run, we concluded that unemployment gap in Algeria responds in the same proportion to both recession and economic expansion (with a different signal), where the effect size reached 0,02. This shows a positive and significant effect of the unemployment gap for the last period on the current unemployment gap (where the impact size reached 0,37). In the short run, we concluded that the unemployment gap responds to recession only but does not respond to recovery. Finally, through the analysis of the dynamic multiplier effects, we concluded that the unemployment gap responds slowly to negative changes compared to positive changes in the output gap at the beginning of the period, but they converge in the long term (after 7–8 years). From a policy perspective, it follows that an increase in economic growth will not only have the desired result of reducing the overall unemployment rate, but will also have the distributional effect of reducing youth unemployment.

This study investigates a modified version of the Okun's Law that incorporates energy consumption and temperature for five Central Asian countries, while it employs the ARDL methodology, spanning the period 1995–2018. While the original Okun's Law is not supported, the analysis does find support for the modified Law, suggesting the importance of regional specific factors. The results document the presence of a negative association between unemployment and real GNP both in the short and in the long run. The impact of energy consumption on unemployment is positive in the long run, while the temperature impacts unemployment both in the short and in the long run. [ABSTRACT FROM AUTHOR]

Sustainable economic growth and reducing unemployment stood at the heart of each monetary policy. Despite controversial discussions among scholars, Okun's Law remains a valuable tool for measuring the relationship between economic growth and the unemployment rate. The study covers the six Western Balkan (WB) countries using quarterly unemployment and economic growth data from 2005 to 2019. The results were obtained from the Vector Autoregressive Model, Granger Causality Test, and Impulse Response Function. The findings show that the GDP growth rate has no influence on the unemployment rate in the case of six Western Balkan countries. From the policy perspective, the outcomes of this study provide valuable indications for the policymakers in WB countries on the importance of economic growth in reducing the unemployment rate. [ABSTRACT FROM AUTHOR]

Purpose: In this paper, the author aims to investigate the relationship between economic growth and unemployment in six Arab countries from Middle East and North Africa (MENA) zone including Tunisia, Egypt, Morocco, Lebanon, Jordan and Oman through the implementation of Okun's law using quarterly dataset covering the time period 2000: 1–2014: 4. Design/methodology/approach: In this paper, static and dynamic linear and nonlinear models are used to test the linkage between cyclical unemployment and cyclical growth rate. Findings: The empirical results from considered models confirm an inverse linkage between unemployment rate and economic growth, as the Okun's law suggests (except for Oman). In a nonlinear autoregressive dynamic linear (NARDL) framework and gap specification, statistically significant Okun's coefficients indicate that output growth can be translated into employment gains. Absolute effect of an economic contraction is significantly larger than that of an expansion in Tunisia, Egypt, Morocco and Lebanon. The opposite is true for Jordan and Oman. Practical implications: Empirical finding provides then an additional proof that Okun's law could exist in a developing countries such as Tunisia, Egypt, Morocco, Lebanon and Jordan. Hence, any attempt to increase gross domestic product (GDP) through some economic fiscal and/or monetary policies in these countries would reduce unemployment rate. Originality/value: Based on asymmetric specification, the author can conclude with precision that an economic upturn of 3.37, 2.98 and 2.5%, respectively, in Tunisia, Morocco and Egypt reduces unemployment by 1%, whilst the downturn of 5.03 and 2.43% (and about 12%), respectively, in Tunisia and Morocco (and Lebanon and Jordan) achieves the opposite. [ABSTRACT FROM AUTHOR]

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This paper analyzes Okun’s Law for Spain using regional data. The results confirm a very high Okun coefficient for Spain, with a high degree of regional heterogeneity. Furthermore, we find that panel data techniques provide notably more stable estimates than time series techniques applied to the same regional data. Finally, the results reveal a remarkable degree of regional heterogeneity in cyclical asymmetry in Okun’s Law for the Spanish case.

In this paper, we use the time-frequency wavelet estimators to analyze the robustness of Okun's Law in the European Union across time and within various economic cycles. We extend the Okun's Law literature as we focus on Europe, directly estimating the time-frequency varying Okun's coefficient. We observe that Okun's coefficient in Europe is unstable at short run (infra and annual cycles). The strength of Okun's Law is time dependent at short run as linkages between growth and unemployment are stronger only during crisis times. Such instability is explained as unemployment predominates growth, leading to a positive coefficient and weaker strength. However, as the frequencies increase, the coefficient is more stable over time and the strength is higher and homogenous over time. [ABSTRACT FROM AUTHOR]

The present study investigates the sectoral version of Okun's law for oil-rich countries from 2000 to 2019. Using a panel ARDL estimation, namely the CS-ARDL and PMG methods, this study confirms the negative association between the sectoral level of output growth and the unemployment rate. Our findings indicate that the unemployment rate is affected more by the output growth of the services sector than by that of the manufacturing and agriculture sectors. Moreover, we show that the relatively higher proportion of the services sector to the total output growth seems to explain these results. Furthermore, we revealed that oil rents play a significant role in the sectoral Okun's coefficient difference. Finally, this study suggests that the importance of the manufacturing and agriculture sectors should be a crucial factor to be considered in the economic policy agenda in resource-rich countries. Hence, the significant implications for these countries' policymakers are to gain additional benefits from oil sector output, support and strengthen their manufacturing and agriculture sectors, achieve sustainable economic growth, and minimize the adverse effects of oil dependence on the economy. [ABSTRACT FROM AUTHOR]

We propose a unique method of nowcasting and forecasting GDP growth based on a forward-looking measure of unemployment (FLUR) and Okun's law that offers a number of advantages over current leading indicators of the Swiss business cycle. The following investigation, covering the period from 1991/1 to 2021/4, demonstrates that our approach outperforms an AR(1) model of GDP growth equally well as the popular Business Cycle Index of the Swiss National Bank and the KOF Barometer with respect to year-to-year growth, but less so in regard to quarter-to-quarter changes. Our findings suggest that our approach offers a reliable and useful indicator to policymakers seeking easily compiled information on the current and future course of the Swiss economy at monthly time intervals. [ABSTRACT FROM AUTHOR]

Understanding the relationship between output and unemployment (Okun's law) is important for policymakers, particularly during crises. One of the aspects of Okun's law that is commonly examined during crises is the structural stability and behavior of Okun's law over the business cycle. While this issue has been addressed empirically in developed countries, little is known about it in developing countries such as South Africa. Hence, this study examines the structural stability and behavior of Okun's law over the business cycle in South Africa. This study adopts both the difference and gap methods of formalizing Okun's law to implement its objectives. The recursive rolling window method was used to test the structural stability of Okun's law over time. The behavior of Okun's law over the business cycle is examined using the Markov-switching regression method. This study was conducted using the data from 1994Q1 to 2021Q1. The results of this study show that Okun's law varies over the business cycle because the response of unemployment to economic expansion is quite different from that of economic contraction. Okun's law holds during economic expansion but fails to hold during an economic recession. Evidence from this study also reveals that the coefficients of Okun's law vary over time. For instance, in the case of the difference method, Okun's coefficients range from 0.063 to 1.221 in absolute terms. For the gap method, especially when the H-P filtering method is applied, Okun's coefficients range from 0.509 to 9.412 in absolute terms. In summary, the findings from this study suggest that cyclical unemployment responds more significantly to cyclical output growth than the response of changes in unemployment to changes in output. In addition, this study proves that Okun's law is unstable over time in South Africa. These findings imply a high degree of variability between the labor and goods markets in the country. Hence, policies must be designed to harmonize the divergence between the two markets. This will require the implementation of macroeconomic policies such as fiscal and monetary policies. From a fiscal policy perspective, the government should reduce taxes or provide tax holidays to firms. The interest rate should be set low in the case of monetary policy. [ABSTRACT FROM AUTHOR]

We introduce a new quadratic asymmetric error correction model that comprehensively accounts for both sign and size asymmetries. We also propose a test protocol that allows to rigorously identify different sources of long-run nonlinearity, namely quadratic nonlinearity, size asymmetry and sign asymmetry. We use a nonparametric residual recursive bootstrap technique to report p-values for the long-run tests. Simulation results confirm the consistency of our proposed estimator in finite samples and show that the bootstrapped tests have reasonably good size and power properties. Although our estimation of the Okun's Law for the USA confirms previous findings on the direction of the sign asymmetry, its reveals that the magnitude of the impact of economic downturns on unemployment decreases faster than the impact of upturns. Forecasting results show that our new model performs better than NARDL. [ABSTRACT FROM AUTHOR]

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The authors question the validity of Okun's law in Latin America in this paper. Based on several econometric models, they show that fluctuations in economic activity have a lesser impact on unemployment rates in Latin American countries than in other, more advanced economies. Instead of stimulus policies focused on reducing unemployment in general, these countries need targeted policies that encourage job creation in specific sectors. That being said, the unemployment—output ratio differs from one Latin American country to another. Where the ratio is weak or non‐existent, cyclical variations adversely affect the quality of employment – another aspect that must also be addressed by economic policy. [ABSTRACT FROM AUTHOR]

We analyse the effect of COVID-19 on the Okun's law relationship for several EU countries and the US. Results are based on regressions and a systematic DF-Beta analysis. Our results indicate that the year 2020 is an outlier in the Okun relationship. However, the direction of change is different in the European countries compared to the US. [ABSTRACT FROM AUTHOR]

The paper draws attention to the fact that findings that follow from estimation of Okun's law are extremely sensitive to methodological choices. The argument rests in a case study oriented upon G7 countries for a period 1991/Q1–2021/Q4 and accounts for a possible asymmetry in the output–unemployment relationship. First, business and unemployment fluctuations are estimated by six purely statistical approaches that arise by casting the Hodrick–Prescott filter, the Hamilton filter and the unobserved component model into a univariate or bivariate framework. Second, the gap version of Okun's law is modelled by means of an auto-regressive distributed lag model or its nonlinear threshold counterpart according as asymmetry is allowed or not. The results indicate huge heterogeneity in Okun coefficients for every country caused by differences even in the basal methodological aspects accounted for in the case study. The diversity of results demonstrates that initial modelling choices may provide economic policy-makers with conflicting insights and advice. This issue follows merely from the absence of general standards that might decide which particular result is more credible. [ABSTRACT FROM AUTHOR]

Background: Despite considerable efforts by the South African government, such as the Youth Employment Service (YES) programme, unemployment remains an enigma. Aim: The study seeks to explore the responsiveness of sectoral employment to changes in the sectoral output in South Africa. Setting: We focus on the agriculture and informal sectors, with the understanding that a large portion (93%) of South Africa’s unemployed population does not have tertiary education qualifications. Thus, the current South Africa’s unemployment phenomenon appears to necessitate the development of policies that will create inclusive skill-based jobs. The study’s hypothesis is theoretically underpinned by Okun’s law, according to which output growth is considered as a primary labour demand stimulus in the economy. When the labour demand function is co-integrated, Okun’s law is assumed to hold; otherwise, ‘jobless growth’ applies. Method: The findings from the Engle-Granger two-step testing procedure on the double-log linear labour demand function over the 1993–2018 period show evidence of jobless growth in the formal agricultural sector, while the informal agriculture and informal non-agriculture sectors demonstrated features of Okun’s law. Results: Notably, the authors found a fairly elastic (1.35%) employment intensity in output growth in the non-agriculture informal sector, with an equilibrium adjustment rate of 86% within a year, ceteris paribus. Conclusion: The findings suggest that, while South Africa’s formal agriculture is no longer labour-intensive, due to agricultural mechanisation, economic policy consciousness in the informal sector, including agri-entrepreneurship, is necessary to create inclusive mass employment in South Africa. Contribution: This study delves into the informal sector, which has been frequently overlooked as a potential solution to South Africa’s unemployment crisis.

In macroeconomic theory, the relationship between unemployment and economic growth is examined by Okun's Law. According to this law, the negative relationship between economic growth and unemployment rate is known as the coefficient of the Okun. In the unemployment debate, different unemployment rates are important as well as the general unemployment rate. Non-agricultural unemployment rate is one of them. In the study, two different models and two Okun coefficients were obtained to analyze the relationship between the general unemployment rate and the non-agricultural unemployment rate and economic growth, in the Turkish economy in the period of 2005Q1- 2019Q2 by using ARDL cointegration method. According to the econometric findings obtained, Okun's Law is valid in the Turkish economy in the period examined. Thus, when the economic growth rate is 1% above the average growth rate of the relevant period 5.3%, the general unemployment rate decreases by 0.07%, while the non-agricultural unemployment rate decreases by 0.08%. This result shows that there is a stronger relationship between non-agricultural unemployment and economic growth rate than the general unemployment rate. [ABSTRACT FROM AUTHOR]

The study aims to verify the relationship between the unemployment rate and economic growth in European Union (EU) regions. As the most important macroeconomic relationship, the significance of the dependence between the labour market situation and the output growth is widely known and considered. Analysis in this research was conducted using data for 229 EU regions on the NUTS-2 level in the years 2013-2019. In order to verify the relationship between the unemployment rate and the output growth, the spatio-temporal models for pooled time series and cross-sectional data (TSCS) were estimated. The Fitted Trend and Elasticity Method of verifying Okun's law was used in the analysis, wherein the deterministic trend factor was enriched with the spatial element. Educational attainment as the additional explanatory variable was included in the models. The neighbourhood between regions was quantified based on two criteria: (1) common border criterion - related to the possibility of population migrations, and (2) similarity of the unemployment rate criterion - related to the imitation effect in the issue of introduced rules and regulations on the labour market by regional governments. One of the hypotheses verified in the investigation is the superiority of the economic neighbourhood over the geographical neighbourhood. [ABSTRACT FROM AUTHOR]

The unemployment is the main channel through which the economic and financial crises influence the social development. In this paper, we propose a mathematical model to study the interactions between financial crisis spread, economic growth and unemployment. We also solve an optimal control problem focusing on the minimization, at the lowest cost, of the adverse effects of the financial crisis. The analysis of the model leads us to two equilibria: (1) a stress free equilibrium, where the economy and the employment are optimal, and (2) a stressed equilibrium. We obtain a theoretical confirmation of Okun's law and a formula to compute the minimum reservation wage in terms of model parameters. Numerical simulations are performed to illustrate the theoretical results obtained. [ABSTRACT FROM AUTHOR]