Okun’s Law: The effects of the COVID-19 pandemic and the temporary layoffs procedures (ERTE) on Spanish regions

Porras-Arena, M. Sylvina and Martín-Román, Ángel L. and Dueñas Fernández, Diego and Llorente Heras, Raquel (2022): Okun’s Law: The effects of the COVID-19 pandemic and the temporary layoffs procedures (ERTE) on Spanish regions.

Abstract

Official statistics indicated a break in Okun’s law in all the Spanish regions due to the COVID-19 pandemic; however, herein, evidence of the validity of the law is shown. The temporary layoff procedures (ERTE) allowed many workers to maintain their jobs. From the productive point of view, the law remained in effect in the regions, showing a strong relationship between idle labour resources and economic activity, and from the social point of view, the apparent breakdown of the law can be interpreted as the implementation of a policy that mitigated the dramatic impact of the economic crisis.

• Item Type: MPRA Paper
• Language: English
• Keywords: Okun’s law; ERTE; expanded unemployment rate
• Subjects: E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E23 - Production; E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E24 - Employment ; Unemployment ; Wages ; Intergenerational Income Distribution ; Aggregate Human Capital ; Aggregate Labor Productivity; J - Labor and Demographic Economics > J6 - Mobility, Unemployment, Vacancies, and Immigrant Workers > J64 - Unemployment: Models, Duration, Incidence, and Job Search; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R2 - Household Analysis > R23 - Regional Migration ; Regional Labor Markets ; Population ; Neighborhood Characteristics

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