okunsLaw - decreases because of discouraged workers,...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Okun's Law in economics is the relationship between the change in the rate of unemployment and the difference between actual and potential real GDP. Okun's law is more of an observation because of factors like productivity affect output. It is estimated that for every 1% increase in the unemployment rate there is about a 2% decrease in output. GDP may increase or decrease faster than unemployment increases or
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: decreases because of discouraged workers, employed workers may work shorter hours, and labor productivity may decrease due to overworking of employee's. Under Okun's law "jobless growth" can also occur where an increase in labor productivity and an increase in the size of the labor force can have net output increase without unemployment rates falling....
View Full Document

This note was uploaded on 04/30/2008 for the course ECO 112 taught by Professor Inya during the Spring '08 term at Monroe CC.

Ask a homework question - tutors are online