Okun's Law

Okun's Law definition - business

Okun's Law

The negative relationship between changes in a nation's unemployment rate and its ratio of actual to potential output. Economist Arthur Okun's research beginning in the 1950s indicated an approximate 1% increase in the unemployment rate was accompanied by a 3% decline in the ratio of actual output to potential output. Subsequent investigations indicated technological changes have caused the ratio to narrow.

The American Heritage® Dictionary of Business Terms Copyright © 2009 by Houghton Mifflin Harcourt Publishing Company. Published by Houghton Mifflin Harcourt Publishing Company. All rights reserved.

Comments
Improve this definition.
Do you have more to add? Share your linguistic knowledge or observation.
/Register to save your comments.