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Okun's Law and Movements over Time in the Unemployment Rate in Australia

Author

Listed:
  • Dixon, R.
  • Thomson, J.

Abstract

This article explains how movements in the unemployment rate reflect the relative rates of growth of employment and the labour force and are related to the participation rate, labour productivity growth and output growth. A framework is provided in which to analyse the determinants of movements in the unemployment rate. We look at the unemployment rate and its relationship to labour force and employment growth in the next section. In section 3 we define the participation rate and discuss how it relates to labour force growth. Then in Section 4, we consider Verdoon's Law and the relationship between output growth and employment growth. In Section 5 we combine the results in the previous section to determine the relationship between the unemployment rate and output growth. Finally, in Section 6, we summarise the findings. We begin looking at these questions by considering the way in which we measure the unemployment rate.

Suggested Citation

  • Dixon, R. & Thomson, J., 2000. "Okun's Law and Movements over Time in the Unemployment Rate in Australia," Department of Economics - Working Papers Series 741, The University of Melbourne.
    • Handle: RePEc:mlb:wpaper:741
    as

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    File URL: http://www.economics.unimelb.edu.au/downloads/wpapers-00-01/741.pdf
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    References listed on IDEAS

    as
    1. Jeff Borland, 1990. "Unemployment in Australia," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 23(1), pages 41-51, March.
    2. P. N. Junankar & C. A. Kapuscinski, 1996. "Survey of Australian Unemployment Data," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 29(1), pages 101-109, January.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. David Norman & Anthony Richards, 2012. "The Forecasting Performance of Single Equation Models of Inflation," The Economic Record, The Economic Society of Australia, vol. 88(280), pages 64-78, March.
    2. Roberto Dell'Anno & Offiong Helen Solomon, 2008. "Shadow economy and unemployment rate in USA: is there a structural relationship? An empirical analysis," Applied Economics, Taylor & Francis Journals, vol. 40(19), pages 2537-2555.
    3. Döpke, Jörg, 2001. "The "Employment Intensity" of Growth in Europe," Kiel Working Papers 1021, Kiel Institute for the World Economy (IfW Kiel).
    4. Jean-Pierre Geldenhuys & Marina Marinkov, 2007. "Robust Estimates of Okun’s Coefficient for South Africa:," Working Papers 055, Economic Research Southern Africa.

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    More about this item

    Keywords

    UNEMPLOYMENT ; ECONOMIC THEORY ; MACROECONOMICS;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General

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