Okun's law across business cycles: the role of labor market rigidities

What is it about?

This study looks at how economic growth and unemployment are linked in 52 countries between 1980 and 2020. It shows that unemployment rises more strongly when economies contract than when they expand, especially in countries with more flexible labor markets. Countries with stronger job protection laws tend to experience more stable unemployment over time, but adjustments to economic changes can be slower. The findings also suggest that the relationship between growth and unemployment changes depending on economic conditions. These insights can help policymakers design better labor market and economic policies.

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Photo by Sasun Bughdaryan on Unsplash

Photo by Sasun Bughdaryan on Unsplash