An Analysis on the Validity of Okun’s Law: An Assessment of India’s Unemployment–Output Relationship

Authors

  • Arnab Das Student

Keywords:

Data analysis, economic reforms, gross domestic product, unemployment

Abstract

This study examines the relation between GDP growth rate and rate of unemployment in the Indian context for the years 1998–2013. It tries to check whether the Okun’s Law holds for this dataset or not i.e., whether unemployment rate has a negative association with GDP growth rate or not. On basis of correlation and regression analysis, it concludes that for India and for this period, there has been no association between GDP Growth Rate and Rate of Unemployment. GDP Growth Rate fails to explain the fluctuations in the Unemployment Rate and on the other hand, Unemployment Rate fails to explain the fluctuations in the GDP Growth Rate. So, India’s experience is similar to some emerging countries (e.g., Brazil) which show the same tendency. India’s growth has been jobless growth. In one hand, it may indicate that the labour in India has become more productive; on the other hand, it may indicate that the potential output has yet not been reached.

Published

2020-12-08

How to Cite

Arnab Das. (2020). An Analysis on the Validity of Okun’s Law: An Assessment of India’s Unemployment–Output Relationship. NOLEGEIN-Journal of Corporate &Amp; Business Laws, 3(2), 12–24. Retrieved from https://mbajournals.in/index.php/JoCBL/article/view/604