Okun's Law, Development, and Demographics: Differences in the Cyclical Sensitivities of Unemployment Across Economy and Worker Groups

IMF Working Papers, November 12, 2021

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Canonical URL: Okun's Law, Development, and Demographics: Differences in the Cyclical Sensitivities of Unemployment Across Economy and Worker Groups

Authors: Zidong An, John C Bluedorn, Gabriele Ciminelli
Publication date: November 12, 2021
Series: Working Paper No. 2021/270
Pages: 22
DOI: https://doi.org/10.5089/9781616356040.001
Core statement: The negative and stable relationship between an economy’s aggregate demand conditions and overall unemployment is well-documented; this paper documents substantial heterogeneity in the cyclical sensitivities of unemployment across worker and economy groups.

Aggregate economy group differences:
- Unemployment is more than twice as sensitive to aggregate demand in advanced economies as in emerging market and developing economies.
Demographic differences:
- Youth unemployment is twice as sensitive to aggregate demand as adult unemployment.
- In advanced economies, women’s unemployment is significantly less sensitive to aggregate demand than men’s unemployment.
Central conclusion:
- These findings point to the highly unequal impacts of the business cycle across worker and economy groups.

Subject: Cyclical unemployment, Employment, Gender, Labor, Labor force participation, Unemployment, Women
Keywords: business cycles, cyclical sensitivities of unemployment, Cyclical unemployment, demographics, economy group, Employment, Labor force participation, Okun’s Law, unemployment, Unemployment, unemployment across economy, unemployment gap, Women, women's unemployment