Okun’s Laws Differentiated by Education

Philippe Askenazy and Christine Erhel ()
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Christine Erhel: CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, CEE - Centre d'études de l'emploi - M.E.N.E.S.R. - Ministère de l'Education nationale, de l’Enseignement supérieur et de la Recherche - Ministère du Travail, de l'Emploi et de la Santé

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Abstract: Our aim in this note is to set Okun's Law in a new perspective. We argue that highly educated labour should react differently to economic downturns and recoveries than lessereducated labour. A simple model shows that when highly educated workers are engaged in long-run projects, the adjustments of their (un)employment to GDP changes become ambiguous. If the access to capital is not too affected by the cycle, these adjustements can be the opposite of the employment changes of the lesser- educated workforce. Estimations for the United States, the European Union and across Europe support the coexistence of different Okun's laws according to educational attainment. This observation may help to explain recent puzzling macroeconomic facts.

Keywords: Okun's Law; education; employment (search for similar items in EconPapers)
Date: 2015
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Working Paper: Okun’s Laws Differentiated by Education (2015)
Working Paper: Okun’s Laws Differentiated by Education (2015)
Working Paper: Okun’s Laws Differentiated by Education (2015)
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