Labor Productivity and Okun's Law: An Empirical Application to Italian Regional Panel Data

Posted: 4 Aug 2012

See all articles by Giovanni Busetta

Giovanni Busetta

University of Messina - Department of Economics, Business, Environmental Sciences and Quantitative Methods

Dario Corso

affiliation not provided to SSRN

Date Written: August 1, 2012

Abstract

Okun's law, named for its proposer, Arthur Okun, was first applied during the 1960s in the USA to describe the relationship between economic growth and unemployment fluctuations. Several attempts were later made to test the empirical applicability of the relationship to different countries and historical periods. Heterogeneous results were generally found in estimating Okun's coefficient, depending on the sample and context analysed. The main goal of this paper is to analyze the relevance of Okun's law to Italian regions. We perform a panel analysis to estimate the influence of asymmetry and local market differences on Okun's relationship. Moreover, observing particularly low values of participation rate in labor markets in southern areas, we propose other indicators to estimate Okun's coefficient which are more compatible with a delayed development area.

Keywords: Asymmetry, Employment, Italian Regions, Okun's Law, Unemployment

JEL Classification: C23, C26, D32, E24, E32, J64

Suggested Citation

Busetta, Giovanni and Corso, Dario, Labor Productivity and Okun's Law: An Empirical Application to Italian Regional Panel Data (August 1, 2012). Rivista Italiana degli Economisti, Vol. 2, August 2012, Available at SSRN: https://ssrn.com/abstract=2123141

Giovanni Busetta (Contact Author)

University of Messina - Department of Economics, Business, Environmental Sciences and Quantitative Methods ( email )

Via T. Cannizzaro 278
Messina, 98122
Italy

Dario Corso

affiliation not provided to SSRN ( email )

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