Okun's Law Calculator

Calculate relationship between unemployment and GDP.

Developer & Financial Tools

Okun's Law Calculator

Calculate the relationship between unemployment rate changes and GDP growth using Okun's Law economic principle.

Calculation Method

Economic Data

Okun's Law Analysis Results

Interpretation

Understanding Okun's Law

The Formula

ΔU = α + β × (GDP Growth - Trend Growth)

Or simplified: ΔU = β × GDP Growth

ΔU: Change in unemployment rate

α: Intercept term

β: Okun's coefficient (typically -0.5)

GDP Growth: Real GDP growth rate

Key Insights

  • Negative relationship between GDP growth and unemployment
  • Coefficient varies by country and time period
  • Useful for economic forecasting and policy analysis
  • Higher GDP growth typically reduces unemployment

Typical Coefficient Values

United States

-0.4 to -0.6

European Union

-0.2 to -0.4

Developing Countries

-0.6 to -0.8

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