Theoretical aspects of the correlation between economic growth and unemployment

Abstract

Labour is a production factor that has a crucial effect in economic growth. Therefore, a correlation exists between the amount of work (employment) and the size of gross domestic product (GDP). It can be assumed that an increase in GDP is accompanied by an increase in employment rate, while its de crease by a fall in unemployment. This relationship between changes in GDP growth and changes in the rate of unemployment has been researched and quantified by the American economist Arthur Okun. He explained the following two empirical relationships: the correlation between the unemployment rate and the real economic product, and the correlation between the divergence of the unemployment rate from its natural rate (NAIRU) and the output gap, i.e. a divergence of real output from potential output. He noted that the unemployment rate is a decreasing function of the performance growth rate of an economy (measured by GDP). Nevertheless, in the 1980s and 1990s the relationship was considered unstable. This was mainly because the causes of unemployment were attributed to an inflexible labour market, and excessive wages and unemployment benefits. However, outsourcing and off-shoring began to significantly affect the link between production capacities, the national labour market and the overall impact of transnational corporations on the global economy.

Praca jest znaczącym czynnikiem produkcji, mającym wpływ na wielkość wytwarzanego PKB w gospodarce. Zatem nie bez znaczenia jest poziom zatrudnienia i bezrobocia w gospodarce. Korelacja między zmianami tempa wzrostu PKB a zmianami stopy bezrobocia została zbadana przez amerykańskiego ekonomistę Arthura Okuna. Na podstawie opracowania danych kwartalnych gospodarki USA w 1960 roku Okun stwierdził, że stopa bezrobocia jest malejącą funkcją stopy wzrostu wydajności gospodarki (mierzoną wielkością PKB). W teorii ekonomii związek ten jest znany jako prawo Okuna.