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Employment, unemployment and real economic growth

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  • Kitov, Ivan
  • Kitov, Oleg

Abstract

We have modeled the employment/population ratio in the largest developed countries. Our results show that the evolution of the employment rate since 1970 can be predicted with a high accuracy by a linear dependence on the logarithm of real GDP per capita. All empirical relationships estimated in this study need a structural break somewhere between 1975 and 1995. Such breaks might be caused by revisions to monetary policy (e.g. inflation targeting) or/and changes in measurement units. Statistically, the link between measured and predicted rate of employment is characterized by the coefficient of determination from 0.84 (Australia) to 0.95 (Japan). The model residuals are likely to be associated with measurement errors.

Suggested Citation

  • Kitov, Ivan & Kitov, Oleg, 2011. "Employment, unemployment and real economic growth," MPRA Paper 32404, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:32404
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    References listed on IDEAS

    as
    1. Christopher A. Pissarides, 2000. "Equilibrium Unemployment Theory, 2nd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262161877, April.
    2. Dale Mortensen & Eva Nagypal, 2007. "More on Unemployment and Vacancy Fluctuations," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 10(3), pages 327-347, July.
    3. Kitov, Ivan, 2011. "Okun’s law revisited. Is there structural unemployment in developed countries?," MPRA Paper 32135, University Library of Munich, Germany.
    4. Ivan O. KITOV, 2009. "The Evolution Of Real Gdp Per Capita In Developed Countries," Journal of Applied Economic Sciences, Spiru Haret University, Faculty of Financial Management and Accounting Craiova, vol. 4(2(8)_ Sum).
    Full references (including those not matched with items on IDEAS)

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. We have validated our model allowing for an accurate prediction of GDP growth using unemployment estimates
      by Ivan Kitov in Economics as Classical Mechanics on 2020-12-27 19:33:00

    Citations

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    Cited by:

    1. Federica Onori & Giovanna Jona Lasinio, 2022. "Modeling “Equitable and Sustainable Well-being” (BES) Using Bayesian Networks: A Case Study of the Italian Regions," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 161(2), pages 1003-1037, June.
    2. Kitov, Ivan, 2021. "The link between unemployment and real economic growth in developed countries," MPRA Paper 105873, University Library of Munich, Germany, revised 07 Feb 2021.

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    More about this item

    Keywords

    employment; unemployment; real GDP; modeling; Okun’s law;
    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
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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