Beyond Okun's Law: Output Growth and Labor Market Flows

Guay Lim, Robert Dixon and Jan van Ours

Melbourne Institute Working Paper Series from Melbourne Institute of Applied Economic and Social Research, The University of Melbourne

Abstract: This paper studies the relationship between the change in the unemployment rate and output growth using an approach based on labour market flows. The framework shows why the Okun coefficient may be constant/time-varying and/or symmetric/asymmetric and that the outcome lies with the behaviour of the labour flows in response to growth. The encompassing framework nests the conditions to determine the properties of the Okun coefficient without the need to rely on retrospective arbitrary dating of recessions. The framework also highlights the potential mispecification in conventional models of Okun's Law unless stringent conditions are assumed about the behavior of labour flows. The empirical analysis is based on the stock-consistent labour market flows data developed by the BLS for the period 1990:2-2017:3.

Keywords: Labour flows; time-varying Okun; asymmetry (search for similar items in EconPapers)
JEL-codes: E24 E32 J21 (search for similar items in EconPapers)
Pages: 29pp
Date: 2019-01
New Economics Papers: this item is included in nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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https://melbourneinstitute.unimelb.edu.au/__data/a ... 971461/wp2019n01.pdf (application/pdf)

Related works:
Journal Article: Beyond Okun’s law: output growth and labor market flows (2021)
Working Paper: Beyond Okun's Law: Output Growth and Labor Market Flows (2018)
Working Paper: Beyond Okun's Law: Output Growth and Labor Market Flows (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:iae:iaewps:wp2019n01

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