Federal Reserve Bank of San Francisco
FRBSF Economic Letter
Okun’s law and the unemployment surprise of 2009
In 2009, strong growth in productivity allowed firms to lay off large numbers of workers while holding output relatively steady. This behavior threw a wrench into the long-standing relationship between changes in GDP and changes in the unemployment rate, known as Okun’s law. If Okun’s law had held in 2009, the unemployment rate would have risen by about half as much as it did over the course of the year.
Cite this item
Mary C. Daly & Bart Hobijn, "Okun’s law and the unemployment surprise of 2009"
, Federal Reserve Bank of San Francisco, FRBSF Economic Letter, number 07, 2010.
Keywords: Unemployment ; Productivity
This item with handle RePEc:fip:fedfel:y:2010:i:mar8:n:2010-07
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