Okun's Law and Jobless Growth

March 4, 2006

This paper relates Okun's theory about economic growth and unemployment to the recent discussion on jobless recovery.

It looks at the US economy since the 1990s and the empirical studies on Okun’s law, which postulates a specific empirical relationship between economic growth and the change in the rate of unemployment. Our general hypothesis is that if the Okun coefficient for the economy has weakened, it explains the jobless recovery.

Authors: Willi Semmler, Jeff Madrick and Tarron Khemraj
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