The Unassuming Economist

From a paper by Maridueña-Larrea, Ángel; Martín-Román, Ángel; Porras-Arena, Sylvina:

“This study analyses the relationship between unemployment and economic growth at the
international level, addressing the nature and decomposition of the Okun coefficient. Using World
Bank data from 173 countries between 1991 and 2019, econometric techniques including
decompositions and spatial dependence analysis are applied. First, the validity of Okun’s law is
confirmed, noting the heterogeneity of the coefficient across countries, suggesting the need for
context-specific approaches to improve labour dynamics. Second, the evidence underlines the
importance of labour productivity over labour supply as a key determinant of the unemploymentoutput relationship. Finally, the identification of spatial patterns highlights the interdependence
between neighbouring economies, justifying coordinated strategies at the regional level to boost
employment. These results provide valuable guidelines for the design of more effective public
policies, adapted to the productive and labour realities of each country and capable of exploiting
of the synergies arising from economic integration.”