Employment, unemployment and real economic growth

Kitov, Ivan and Kitov, Oleg (2011): Employment, unemployment and real economic growth.

Abstract

We have modeled the employment/population ratio in the largest developed countries. Our results show that the evolution of the employment rate since 1970 can be predicted with a high accuracy by a linear dependence on the logarithm of real GDP per capita. All empirical relationships estimated in this study need a structural break somewhere between 1975 and 1995. Such breaks might be caused by revisions to monetary policy (e.g. inflation targeting) or/and changes in measurement units. Statistically, the link between measured and predicted rate of employment is characterized by the coefficient of determination from 0.84 (Australia) to 0.95 (Japan). The model residuals are likely to be associated with measurement errors.

• Item Type: MPRA Paper
• Language: English
• Keywords: employment, unemployment, real GDP, modeling, Okun’s law
• Subjects: 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 > J2 - Demand and Supply of Labor > J21 - Labor Force and Employment, Size, and Structure

References

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Kitov, I. (2011). Okun’s law revisited. Is there structural unemployment in developed countries? MPRA Paper 32135, University Library of Munich, Germany.

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