Munich Personal RePEc Archive

Okun’s Law, Employment Paradox and Impact of Unemployment on the Economy of the USSR and Russia

BLINOV, Sergey (2014): Okun’s Law, Employment Paradox and Impact of Unemployment on the Economy of the USSR and Russia.

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Abstract

For effective economic growth, intentional “creation” of unemployment is required to be followed up by its «elimination». From Okun’s law one can infer an interesting corollary: growing unemployment without reducing GDP increases the economy’s potential. This corollary can be proved theoretically (unlike Okun’s law which is an empirical law). There were two causes of the USSR’s economic slowdown on the eve of its breakup. One of them was a shortage of labor which is identical to lack of unemployment. However strange it may seem, but the economic problems of modern Russia have the same root cause.

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