This study aims to estimate the minimum rate of economic growth required to reduce unemployment in the large emerging markets economies of the Fragile Five (i.e., Brazil, India, Russia, South Africa, and Türkiye). As proposed by Hansen (1999), the study conducts a panel threshold analysis based on Okun’s law to determine threshold effects. This paper presents new evidence regarding Okun’s law over the past three decades for five large emerging markets. The findings suggest the relationship between the cyclical components of unemployment and GDP growth to be characterized by non-linearities. In particular, unemployment will fall if economic growth exceeds an average threshold of 5.5%. This result proves the validity of Okun’s Law regarding the threshold for the country group under investigation. This study has also proven that economic growth must exceed a certain level in order to reduce the unemployment rate in these economies. Policymakers in the Fragile Five should consider a minumum of 5.50% as an economic growth target to provide employment. When considering the unstable economic performance of the Fragile Five’s economies, structural reforms should be made to ensure adequate economic growth and increase employment. To address the problem of poor growth, this study can propose economic measures such as reducing employment taxes, producing investment and employment-based policies, and increasing the effectiveness of private employment offices.
Altig, D., Fitzgerald, T. & Rupert, P. (1997). Okun’s law revisited: Should we worry about low unemployment. Federal Reserve Bank of ClevelandEconomic Commentary. google scholar
Attfield, C. L. & Silverstone, B. (1997). Okun’s coefficient: a comment. Review of economics and statistics, 79 (2), 326-329. google scholar
Aydin, C. & Esen, Ö. (2017). Inflationary Threshold Effects on the Relationship between Unemployment and Economic Growth: Evidence from Turkey. International journal of economic perspectives, 11 (2), 88-97. google scholar
Azorin, J. D. B. (2017). Output growth thresholds for the creation of employment and the reduction of unemployment: A spatial analysis with panel data from the Spanish provinces, 2000-2011. Regional Science and Urban Economics, 67, 42-49. google scholar
Baltagi, B. H. (2013). Econometric Analysis of Panel Data (Fifth Edition). West Sussex: John Wiley and Sons. google scholar
Blazquez-Fernandez, C., Cantarero-Prieto, D. & Pascual-Saez, M. (2018). Okun’s Law in Selected European Countries (2005-2017): An Age and Gender Analysis. Economics and Sociology, 11 (2). google scholar
Bod’a, M. & Povazanova, M. (2021). Output-unemployment asymmetry in Okun coefficients for OECD countries. Economic Analysis and Policy, 69, 307-323. google scholar
Butkus, M. & Seputiene, J., 2019. The output gap and youth unemployment: An analysis based on Okun’s law. Economies, 7 (108). google scholar
Caraiani, P. (2006a). The relationship between unemployment and output cycles in Korea. Romanian Journal of Economic Forecasting, 1, 51-64. google scholar
Caraiani, P. (2006b). Alternative methods of estimating the Okun coefficient. Applications for Romania. Romanian Journal of Economic Forecasting, 7 (4), 82-89. google scholar
Chan K.S. (1993). Consistency and limiting distribution of the least squares estimator of a threshold autoregressive model. The Annals of Statistics, 21, 520-533 google scholar
Courtney, H.G. (1991). The Beveridge Curve and Okun’s Law: A Re-Examination of Fundamental Relationships in the United States, Ph.D. thesis, Massachusetts Institute of Technology. google scholar
Daly, M. C., G. Fernald, Ö Jorda, & F. Nechio (2012). Okun’s Macroscope: Output and Employment after the Great Recession, Manuscript, Federal Reserve Bank of San Francisco. google scholar
Dunsch, S. (2017). Age- and gender-specific unemployment and Okun’s law in CEE countries. East. Eur. Econ., 55, 377-393. google scholar
Flaig, G., & Rottmann, H. (2001). Input Demand and the Short-and Long-Run Employment Thresholds: An Empirical Analysis for the German Manufacturing Sector. German Economic Review, 2 (4), 367-384. google scholar
Fouquau, J. (2008). Threshold effects in Okun’s law: a panel data analysis. Economics Bulletin, 5, pp-1-15. google scholar
Friedman, B. M. (1988). Lessons on Monetary Policy from the 1980s. Journal of Economic Perspectives, 2, 51-72. google scholar
GaH, J., Smets, F. & Wouters, R. (2012). Slow recoveries: A structural interpretation. Journal ofMoney, Credit and Banking, 44, 9-30. google scholar
Gordon, Robert J. (1998). Macroeconomics. New York: Harper Collins. google scholar
Göçer, İ. (2015). Okun yasası: Türkiye üzerine bir uygulama. Uluslararası Ekonomik Araştırmalar Dergisi, 1 (1). google scholar
Hansen, B. E. (1999). Threshold Effects in Non-Dynamic Panels: Estimation, Testing, And Inference. Journal of Econometrics, 93, 345-368. google scholar
Harris, R. & Silverstone, B. (2001). Testing for asymmetry in Okun’s law: A cross-country comparison. Economics bulletin, 5 (2), 1-13. google scholar
Hsing, Y. (1991). Unemployment and the GNP gap: Okun’s Law Revisited. Eastern Economic Journal, 17 (4), 409-416. google scholar
Huang, H. C. & Chang, Y. K. (2005). Investigating Okun’s law by the structural break with threshold approach: Evidence from Canada. The Manchester School, 73(5), 599-611. google scholar
Hutengs, O. & Stadtmann, G. (2014). Age-and gender-specific unemployment in Scandinavian countries: An analysis based on Okun’s law. Comparative Economic Studies, 56 (4), 567-580. google scholar
Im, K.S., Peseran M.H. & Shin Y. (2003). Testing for Unitroots in Heterogeneous Panels. Journal of Econometrics, 115 (1), 53-74 google scholar
Jardin, M. & Gaetan, S. (2012). How Okun’s law is non-linear in Europe: a semi-parametric approach. Rennes, University ofRennes, 16th annual conference on macroeconomic analysis and international finance, April 2012 google scholar
Jula, D. & Jula, N. M. (2013). Economic growth and structural changes in regional employment. Romanian Journal of Economic Forecasting, 16 (2), 52-69. google scholar
Kosfeld, R. & Dreger, C. (2006). Thresholds for employment and unemployment: A spatial analysis of German regional labour markets, 1992-2000. Papers in Regional Science, 85 (4), 523-542. google scholar
Lee, J. (2000). The robustness of Okun’s law: Evidence from OECD countries. Journal of macroeconomics, 22 (2), 331-356. google scholar
Levin, A., Lin C.F. & Chu C.S.J. (2002). Unitroot Tests in Panel Data: Asymptotic and Finite-Sample Properties. Journal of Econometrics, 108 (1), 1-24. google scholar
Mankiw, N. G. (1994). Macroeconomics. New York: Worth Publishers. google scholar
Marconi, G., Beblavy, M. & Maselli, I. (2016). Age effects in Okun’s law with different indicators of unemployment. Appl. Econ. Lett., 23, 580-583. google scholar
McKinsey Global Institute (2011). An Economy That Works: Job Creation and America’s Future, June 2011 report. google scholar
Meyer, B. & Tasci, M. (2012). An unstable Okun’s Law, not the best rule of thumb. Economic Commentary, June 7. google scholar
Owyang, M T., & T. Sekhposyan. (2012). Okun’s law over the business cycle: was the great recession all that different? Federal Reserve Bank of St. Louis Review, 94 (5), 399-418. google scholar
Palley, T.I. (1993). Okun’s Law and the Asymmetric and Changing Cyclical Behaviour of the USA Economy. International Review of Applied Economics, 7, 144-62. google scholar
Phiri, A. (2014). Nonlinear co-integration between unemployment and economic growth in South Africa. Managing Global Transitions, 12 (2), 81-102. google scholar
Prachowny, M. F. J. (1993). Okun’s Law: Theoretical Foundations and Revised Estimates. Review of Economics and Statistics, 75, 331-336. google scholar
Sheehan, Richard G., and Frank Zahn. (1980). The Variability of the Okun Coefficient. Southern Economic Journal, 47, 488-97. google scholar
Stanley, M. (2013). FX Pulse. Accessed August 01 2013. https://www.morganstanley.com/institutional/research/pdf/FXPulse_20130801.pdf google scholar
Vinayagathasan, T. (2013). Inflation and economic growth: A dynamic panel threshold analysis for Asian economies. Journal of Asian Economics, 26, 31-41. google scholar
Viren, M. (2001). The okun curve is non-linear. Economies letters, 70, 253-257. google scholar
Wang, X. & Huang, H. C. (2017). Okun’s law revisited: a threshold in regression quantiles approach. Applied Economics Letters, 24 (21), 1533-1541. google scholar
Weber, C. (1995). Cyclical output, cyclical unemployment, and Okun’s coefficient: a new approach. Journal of Applied Econometrics, 10, 433-446. google scholar
Worldbank Database, (2019). PWT 9.0 Datas, https://data.worldbank.org/ google scholar
Seçilmiş Gelişmekte Olan Büyük Ülkelerde İşsizlik ve Ekonomik Büyüme Arasındaki İlişki: Eşik Regresyon Analizi Kullanılarak Yeniden Bir İnceleme
Year 2024,
Volume: 11 Issue: 1, 76 - 85, 16.02.2024
Bu çalışma, Kırılgan Beşlinin gelişmekte olan büyük ekonomilerinde (Brezilya, Hindistan, Rusya, Güney Afrika ve Türkiye) işsizliği azaltmak için gereken minimum ekonomik büyüme oranını tahmin etmeyi amaçlamaktadır. Çalışmada Hansen (1999) tarafından önerildiği gibi eşik etkilerini belirlemek için Okun kanununu temel alan bir panel eşik analizi yapılmaktadır. Bu makale, gelişmekte olan beş büyük pazar için son otuz yılda Okun yasasına ilişkin yeni kanıtlar sunmaktadır. Bulgular, işsizliğin döngüsel bileşenleri ile GSYİH büyümesi arasındaki ilişkinin doğrusal olmama durumuyla tanımlanabileceğini öne sürüyor. Özellikle ekonomik büyüme ortalama %5,5 eşiğini aşarsa işsizlik azalacaktır. Bu sonuç, incelenen ülke grubu için eşik değere ilişkin Okun Yasasının geçerliliğini kanıtlamaktadır. Kırılgan Beşli’deki politika yapıcılar, istihdam sağlamak için en az %5,50’yi ekonomik büyüme hedefi olarak görmelidir. Kırılgan Beşli ekonomilerinin istikrarsız ekonomik performansı göz önüne alındığında, yeterli ekonomik büyümeyi sağlamak ve istihdamı artırmak için yapısal reformlar yapılmalıdır. Zayıf büyüme sorununu ele almak için bu çalışma, istihdam vergilerinin düşürülmesi, yatırım ve istihdama dayalı politikalar üretilmesi ve özel istihdam bürolarının etkinliğinin artırılması gibi ekonomik önlemler önerebilir.
Altig, D., Fitzgerald, T. & Rupert, P. (1997). Okun’s law revisited: Should we worry about low unemployment. Federal Reserve Bank of ClevelandEconomic Commentary. google scholar
Attfield, C. L. & Silverstone, B. (1997). Okun’s coefficient: a comment. Review of economics and statistics, 79 (2), 326-329. google scholar
Aydin, C. & Esen, Ö. (2017). Inflationary Threshold Effects on the Relationship between Unemployment and Economic Growth: Evidence from Turkey. International journal of economic perspectives, 11 (2), 88-97. google scholar
Azorin, J. D. B. (2017). Output growth thresholds for the creation of employment and the reduction of unemployment: A spatial analysis with panel data from the Spanish provinces, 2000-2011. Regional Science and Urban Economics, 67, 42-49. google scholar
Baltagi, B. H. (2013). Econometric Analysis of Panel Data (Fifth Edition). West Sussex: John Wiley and Sons. google scholar
Blazquez-Fernandez, C., Cantarero-Prieto, D. & Pascual-Saez, M. (2018). Okun’s Law in Selected European Countries (2005-2017): An Age and Gender Analysis. Economics and Sociology, 11 (2). google scholar
Bod’a, M. & Povazanova, M. (2021). Output-unemployment asymmetry in Okun coefficients for OECD countries. Economic Analysis and Policy, 69, 307-323. google scholar
Butkus, M. & Seputiene, J., 2019. The output gap and youth unemployment: An analysis based on Okun’s law. Economies, 7 (108). google scholar
Caraiani, P. (2006a). The relationship between unemployment and output cycles in Korea. Romanian Journal of Economic Forecasting, 1, 51-64. google scholar
Caraiani, P. (2006b). Alternative methods of estimating the Okun coefficient. Applications for Romania. Romanian Journal of Economic Forecasting, 7 (4), 82-89. google scholar
Chan K.S. (1993). Consistency and limiting distribution of the least squares estimator of a threshold autoregressive model. The Annals of Statistics, 21, 520-533 google scholar
Courtney, H.G. (1991). The Beveridge Curve and Okun’s Law: A Re-Examination of Fundamental Relationships in the United States, Ph.D. thesis, Massachusetts Institute of Technology. google scholar
Daly, M. C., G. Fernald, Ö Jorda, & F. Nechio (2012). Okun’s Macroscope: Output and Employment after the Great Recession, Manuscript, Federal Reserve Bank of San Francisco. google scholar
Dunsch, S. (2017). Age- and gender-specific unemployment and Okun’s law in CEE countries. East. Eur. Econ., 55, 377-393. google scholar
Flaig, G., & Rottmann, H. (2001). Input Demand and the Short-and Long-Run Employment Thresholds: An Empirical Analysis for the German Manufacturing Sector. German Economic Review, 2 (4), 367-384. google scholar
Fouquau, J. (2008). Threshold effects in Okun’s law: a panel data analysis. Economics Bulletin, 5, pp-1-15. google scholar
Friedman, B. M. (1988). Lessons on Monetary Policy from the 1980s. Journal of Economic Perspectives, 2, 51-72. google scholar
GaH, J., Smets, F. & Wouters, R. (2012). Slow recoveries: A structural interpretation. Journal ofMoney, Credit and Banking, 44, 9-30. google scholar
Gordon, Robert J. (1998). Macroeconomics. New York: Harper Collins. google scholar
Göçer, İ. (2015). Okun yasası: Türkiye üzerine bir uygulama. Uluslararası Ekonomik Araştırmalar Dergisi, 1 (1). google scholar
Hansen, B. E. (1999). Threshold Effects in Non-Dynamic Panels: Estimation, Testing, And Inference. Journal of Econometrics, 93, 345-368. google scholar
Harris, R. & Silverstone, B. (2001). Testing for asymmetry in Okun’s law: A cross-country comparison. Economics bulletin, 5 (2), 1-13. google scholar
Hsing, Y. (1991). Unemployment and the GNP gap: Okun’s Law Revisited. Eastern Economic Journal, 17 (4), 409-416. google scholar
Huang, H. C. & Chang, Y. K. (2005). Investigating Okun’s law by the structural break with threshold approach: Evidence from Canada. The Manchester School, 73(5), 599-611. google scholar
Hutengs, O. & Stadtmann, G. (2014). Age-and gender-specific unemployment in Scandinavian countries: An analysis based on Okun’s law. Comparative Economic Studies, 56 (4), 567-580. google scholar
Im, K.S., Peseran M.H. & Shin Y. (2003). Testing for Unitroots in Heterogeneous Panels. Journal of Econometrics, 115 (1), 53-74 google scholar
Jardin, M. & Gaetan, S. (2012). How Okun’s law is non-linear in Europe: a semi-parametric approach. Rennes, University ofRennes, 16th annual conference on macroeconomic analysis and international finance, April 2012 google scholar
Jula, D. & Jula, N. M. (2013). Economic growth and structural changes in regional employment. Romanian Journal of Economic Forecasting, 16 (2), 52-69. google scholar
Kosfeld, R. & Dreger, C. (2006). Thresholds for employment and unemployment: A spatial analysis of German regional labour markets, 1992-2000. Papers in Regional Science, 85 (4), 523-542. google scholar
Lee, J. (2000). The robustness of Okun’s law: Evidence from OECD countries. Journal of macroeconomics, 22 (2), 331-356. google scholar
Levin, A., Lin C.F. & Chu C.S.J. (2002). Unitroot Tests in Panel Data: Asymptotic and Finite-Sample Properties. Journal of Econometrics, 108 (1), 1-24. google scholar
Mankiw, N. G. (1994). Macroeconomics. New York: Worth Publishers. google scholar
Marconi, G., Beblavy, M. & Maselli, I. (2016). Age effects in Okun’s law with different indicators of unemployment. Appl. Econ. Lett., 23, 580-583. google scholar
McKinsey Global Institute (2011). An Economy That Works: Job Creation and America’s Future, June 2011 report. google scholar
Meyer, B. & Tasci, M. (2012). An unstable Okun’s Law, not the best rule of thumb. Economic Commentary, June 7. google scholar
Owyang, M T., & T. Sekhposyan. (2012). Okun’s law over the business cycle: was the great recession all that different? Federal Reserve Bank of St. Louis Review, 94 (5), 399-418. google scholar
Palley, T.I. (1993). Okun’s Law and the Asymmetric and Changing Cyclical Behaviour of the USA Economy. International Review of Applied Economics, 7, 144-62. google scholar
Phiri, A. (2014). Nonlinear co-integration between unemployment and economic growth in South Africa. Managing Global Transitions, 12 (2), 81-102. google scholar
Prachowny, M. F. J. (1993). Okun’s Law: Theoretical Foundations and Revised Estimates. Review of Economics and Statistics, 75, 331-336. google scholar
Sheehan, Richard G., and Frank Zahn. (1980). The Variability of the Okun Coefficient. Southern Economic Journal, 47, 488-97. google scholar
Stanley, M. (2013). FX Pulse. Accessed August 01 2013. https://www.morganstanley.com/institutional/research/pdf/FXPulse_20130801.pdf google scholar
Vinayagathasan, T. (2013). Inflation and economic growth: A dynamic panel threshold analysis for Asian economies. Journal of Asian Economics, 26, 31-41. google scholar
Viren, M. (2001). The okun curve is non-linear. Economies letters, 70, 253-257. google scholar
Wang, X. & Huang, H. C. (2017). Okun’s law revisited: a threshold in regression quantiles approach. Applied Economics Letters, 24 (21), 1533-1541. google scholar
Weber, C. (1995). Cyclical output, cyclical unemployment, and Okun’s coefficient: a new approach. Journal of Applied Econometrics, 10, 433-446. google scholar
Worldbank Database, (2019). PWT 9.0 Datas, https://data.worldbank.org/ google scholar
Şit, M. (2024). The Relationship Between Unemployment and Economic Growth in Selected Large Emerging Countries: A Revisit Using Threshold Regression Analysis. İktisat Politikası Araştırmaları Dergisi, 11(1), 76-85. https://doi.org/10.26650/JEPR1232910
AMA
Şit M. The Relationship Between Unemployment and Economic Growth in Selected Large Emerging Countries: A Revisit Using Threshold Regression Analysis. JEPR. February 2024;11(1):76-85. doi:10.26650/JEPR1232910
Chicago
Şit, Mustafa. “The Relationship Between Unemployment and Economic Growth in Selected Large Emerging Countries: A Revisit Using Threshold Regression Analysis”. İktisat Politikası Araştırmaları Dergisi 11, no. 1 (February 2024): 76-85. https://doi.org/10.26650/JEPR1232910.
EndNote
Şit M (February 1, 2024) The Relationship Between Unemployment and Economic Growth in Selected Large Emerging Countries: A Revisit Using Threshold Regression Analysis. İktisat Politikası Araştırmaları Dergisi 11 1 76–85.
IEEE
M. Şit, “The Relationship Between Unemployment and Economic Growth in Selected Large Emerging Countries: A Revisit Using Threshold Regression Analysis”, JEPR, vol. 11, no. 1, pp. 76–85, 2024, doi: 10.26650/JEPR1232910.
ISNAD
Şit, Mustafa. “The Relationship Between Unemployment and Economic Growth in Selected Large Emerging Countries: A Revisit Using Threshold Regression Analysis”. İktisat Politikası Araştırmaları Dergisi 11/1 (February 2024), 76-85. https://doi.org/10.26650/JEPR1232910.
JAMA
Şit M. The Relationship Between Unemployment and Economic Growth in Selected Large Emerging Countries: A Revisit Using Threshold Regression Analysis. JEPR. 2024;11:76–85.
MLA
Şit, Mustafa. “The Relationship Between Unemployment and Economic Growth in Selected Large Emerging Countries: A Revisit Using Threshold Regression Analysis”. İktisat Politikası Araştırmaları Dergisi, vol. 11, no. 1, 2024, pp. 76-85, doi:10.26650/JEPR1232910.
Vancouver
Şit M. The Relationship Between Unemployment and Economic Growth in Selected Large Emerging Countries: A Revisit Using Threshold Regression Analysis. JEPR. 2024;11(1):76-85.