In economics, Okun's law (named after Arthur Melvin Okun) is an empirically observed relationship relating unemployment to losses in a country's production. The "gap version" states that for every 1% increase in the unemployment rate, a country's GDP will be at an additional roughly 2% lower than its potential GDP. The "difference version" describes the relationship between quarterly changes in unemployment and quarterly changes in real GDP. The stability and usefulness of the law has been disputed. The name refers to economist Arthur Okun who proposed the relationship in 1962.
Read more about Okun's Law: Imperfect Relationship, Mathematical Statements, Derivation of The Growth Rate Form of Okun's Law
Famous quotes containing the word law:
“Our law very often reminds one of those outskirts of cities where you cannot for a long time tell how the streets come to wind about in so capricious and serpent-like a manner. At last it strikes you that they grew up, house by house, on the devious tracks of the old green lanes; and if you follow on to the existing fields, you may often find the change half complete.”
—Walter Bagehot (1826–1877)