Age effects in Okun’s law with different indicators of unemployment

Gabriele Marconi, Miroslav Beblavý () and Ilaria Maselli

Applied Economics Letters, 2016, vol. 23, issue 8, 580-583

Abstract: We reassess the results from the literature on the relationship between the youth unemployment rate and GDP growth (Okun’s law), based on the concern that the unemployment rate is not an ideal indicator for teenagers and young adults. Using the unemployment ratio instead, we find that youth unemployment (15–24 years old) is not significantly more responsive to economic growth than prime-age (25–64) unemployment. However, compared to prime-age unemployment, teenagers’ unemployment (15–19) is relatively unresponsive, whereas young adult’s (20–24) unemployment is more strongly correlated with economic growth. These results are quite different than those obtained with the unemployment rate as the dependent variable.

Date: 2016
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DOI: 10.1080/13504851.2015.1090540

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