Age Effects in Okun's Law with Different Indicators of Unemployment

Posted: 27 Nov 2015

See all articles by Gabriele Marconi

Gabriele Marconi

OECD

Miroslav Beblavy

Centre for European Policy Studies (CEPS)

Ilaria Maselli

Centre for European Policy Studies (CEPS)

Date Written: November 26, 2015

Abstract

We reassess the results from the literature on the relationship between the youth unemployment rate and GDP growth (Okun’s law), based on the concern that the unemployment rate is not an ideal indicator for teenagers and young adults. Using the unemployment ratio instead, we find that youth unemployment (15–24 years old) is not significantly more responsive to economic growth than prime-age (25–64) unemployment. However, compared to prime-age unemployment, teenagers’ unemployment (15–19) is relatively unresponsive, whereas young adult’s (20–24) unemployment is more strongly correlated with economic growth. These results are quite different than those obtained with the unemployment rate as the dependent variable.

Suggested Citation

Marconi, Gabriele and Beblavy, Miroslav and Maselli, Ilaria, Age Effects in Okun's Law with Different Indicators of Unemployment (November 26, 2015). Available at SSRN: https://ssrn.com/abstract=2695730

Gabriele Marconi (Contact Author)

OECD ( email )

2 rue Andre Pascal
Paris Cedex 16, 75775
France

Miroslav Beblavy

Centre for European Policy Studies (CEPS) ( email )

1 Place du Congres
Brussels, 1000
Belgium

Ilaria Maselli

Centre for European Policy Studies (CEPS) ( email )

1 Place du Congres, 1000
Brussels, 1000
Belgium

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