A. Okun's law reflects the relationship between Control. Solutions to problems using Okun's law Calculate the actual value of Okun's coefficient Luxembourg country

Unemployment leads to significant economic losses in goods and services not created due to equipment downtime. As a result, a certain part of GDP is not produced (the danger of cyclical unemployment).

The relationship between GDP losses and unemployment is determined by Arthur Okun's law (1928-1979): every 1% increase in unemployment above its natural level leads to a lag in GDP by 2.5%.

where Y is actual GDP;

Y′ - potential GDP;

U – actual unemployment rate:

Un – natural unemployment rate;

λ is the sensitivity coefficient (in absolute terms) of GDP to changes in cyclical unemployment - the Okun coefficient.

Assume that frictional, structural and cyclical unemployment are 3% each. What will be the loss of GDP at this level of unemployment in the country? The natural rate of unemployment (frictional plus structural) is 6%, and the rate of actual unemployment (natural plus cyclical) will be 9%, i.e. 3% higher than natural level. The GDP loss will be 3% 2.5 (Ouken's number) - 7.5%.

The transition to a market economy is accompanied by rising unemployment. Special employment services deal with the problems of employment of the population, their career guidance and retraining, and the issuance of unemployment benefits.

The state provides certain social guarantees to the unemployed. Thus, they are paid unemployment benefits, provided with financial assistance to the unemployed and members of his family, paid a stipend during the period of professional retraining, reimbursed expenses and given compensation in connection with moving to another area to a new place of residence, to a place of work in the direction of the state employment service.

2.4 Socio-economic consequences of unemployment

Are the effects of unemployment a serious problem? Without a doubt. The socio-economic consequences of unemployment are considered, along with the problems of poverty and social instability, as one of the most pressing global and national problems.

Indeed, in transition period the only way to encourage large masses of people to move in order to more rationally form the employment structure is to oust them from inefficient industries. At the same time, it is obvious that the implementation of ultra-strict measures can cause massive bankruptcy of enterprises and the emergence of a wave of unemployment that will inevitably lead to a social explosion. A “reasonable measure” of severity must be observed.

Very often, only the economic effect of unemployment is assessed in the form of the number of laid-off workers and the amount of benefits paid, and the social consequences, which are difficult to distinguish and are cumulative in nature, are practically not assessed. However, the degree of negative impact of unemployment on the situation in the country depends on the specific parameters of the social situation.

It should be noted that it is necessary to determine not just the ability to assess social damage or indirect losses in the economy (from a decrease in the amount of time worked, a drop in labor intensity and productivity), but also direct costs associated with the increase in government spending to overcome socially negative processes. Such studies are of undoubted interest, since they allow us to more clearly define the boundaries of the problem and outline ways out of the crisis situation, in accordance with the characteristics of the social, economic and political development of the country at the present stage.

I. Social consequences of unemployment

Negative

1. Aggravation of the crime situation.

2. Increased social tension.

3. Increase in the number of physical and mental illnesses.

4. Increasing social differentiation.

5. Decrease in labor activity.

Positive

1. Increasing the social value of the workplace.

2. Increase in personal free time.

3. Increased freedom to choose where to work.

4. Increasing the social significance and value of work.

II. Economic consequences of unemployment

Negative

1. Devaluation of the consequences of learning.

2. Reduction in production.

3. Costs of helping the unemployed.

4. Loss of qualifications.

5. Declining living standards.

6. Underproduction of national income.

7. Decrease in tax revenues.

Positive

1. Creating a reserve work force for structural restructuring of the economy.

2. Competition between workers as a stimulus for the development of work abilities.

3. A break from employment for retraining and improving the level of education.

4. Stimulating the growth of labor intensity and productivity.

During the development of economic theory (in particular the theory of unemployment, its types and causes), various economists offered their options for reducing the unemployment rate. For example, Keynesians believed that a self-regulating economy could not overcome unemployment. The level of employment depends on the so-called “effective demand” (simply - the level of consumption and investment). J.M. Keynes wrote: “The chronic tendency towards underemployment that characterizes modern society has its roots in underconsumption...”. Underconsumption is expressed in the fact that as the consumer’s income increases, due to psychological factors, his “propensity to save” exceeds the “incentive to invest,” which leads to a decline in production and unemployment.

Thus, the Keynesians, having shown the inevitability of a crisis in a self-regulating economy, pointed to the need for state economic influence to achieve full employment. First of all, effective demand should be increased by reducing interest rates and increasing investment. Monetarists opposed Keynesian methods.

In 1967, M. Friedman suggested the existence of a “natural level of unemployment,” which is strictly determined by labor market conditions and cannot be changed by measures public policy. If the government tries to maintain employment above its “natural level” using traditional fiscal and credit methods of increasing demand, then these measures will have a short-term effect and will only lead to higher prices.

Monetarist methods of regulating employment are quite radical. They blame the workers for abstaining from work and receiving compensation in the form of benefits. Hence the recommendations to cancel these benefits in order to force people to work. Monetarists propose to abandon stimulating economic growth by increasing demand. However, a policy of limiting demand can cause a sharp deterioration in the living standards of the population, which will affect the social situation. What steps can the state take to reduce the unemployment rate?

The variety of types of unemployment makes the task of reducing it extremely difficult. Since there is no single way to combat unemployment, any country has to use different methods to solve this problem.

There are four main areas of state regulation of the labor market.

First, these are programs to stimulate employment growth and increase the number of jobs;

Secondly, programs aimed at training and retraining the workforce;

Third, labor recruitment assistance programs;

Fourthly, social insurance programs for the unemployed.

In addition, there is indirect regulation of the labor market:

Tax;

Monetary;

Depreciation policy.

Measures of indirect regulation of the labor market are at the same time measures of general economic regulation and affect the dynamics of employment and unemployment.

According to many calculations carried out at intervals from 1948 (since that time quarterly GDP statistics for the United States appeared) to the present, GDP growth, at which there is no change in the unemployment rate, averages about 3% per annum. This value can be interpreted as a result of the growth of the economically active population, capital-labor ratio and total productivity of production factors (or, if you prefer, scientific and technological progress, which is not the same, but close). A change in the unemployment rate by 1 percentage point corresponds to a deviation of real GDP growth by 2 points from this level.

But this is the American version. To check the effect of the law in Russia, we will use statistical data:

1) First, let's look at the left side of the formula. We need to calculate the size of the market gap. To do this, you should know the volume of production potentially possible with this technology Yf - national income of full employment, and the actual national income Y. www.gks.ru

Now we calculate the gap:

The data is calculated as a percentage for the convenience of further conversions.

natural rate of unemployment	actual unemployment

Now the market unemployment rate is:

The average will be 1.43. This means that each percentage point of short-term unemployment reduced the actual volume of GNP by 1.43% compared to full-time GNP.

During the previous recession of 1990-1998, which, judging by the dynamics of GDP, was much deeper than the current one, the problem of unemployment seemed to be less acute. What can statistics say about this? How much has employment flexibility increased in relation to output over the inter-crisis decade?

The elasticity of the unemployment rate with respect to GDP, calculated for the period from 1995 to 2008, is about 2. That is, if GDP fell by 10%, the unemployment rate on average grew by about 20% (namely, percent, not percentage points!), then instead of, say, 7 it became 8.4%. The reaction, as we see, is generally unusually weak. This is most likely due to the fact that for determining the average elasticity, the period 1995-1998 turns out to be critical here, which saw the most profound changes in both GDP and employment. And this is a completely different economy, with inelastic employment. Many people preferred to stay at their previous jobs, receiving pennies, in the hope of surviving difficult times, and the same “Soviet” principles of employment were generally adhered to by the management of enterprises.

Therefore, in 1999, employment grew very slowly, despite the rise in GDP: enterprises had large internal reserves not only of production capacity, but also of the intensity of use of available employees.

Subsequently, the reaction of employment to changes in GDP dynamics, in particular to the acceleration of growth in 2006-2007 and to the recession in 2008-2009, turns out to be much sharper than predicted by the “average interval” equation. In the period 2005-2008, a similar elasticity is already about 5, which means that a fall in GDP by 10% will cause an increase in the unemployment rate from 7 to approximately 10.5%. That is, according to Okun, the reaction is approximately 1 in 3: for 1 percentage point increase in unemployment, there is a 3% drop in GDP.

How much can unemployment rise given the current elasticity and some reasonable forecast of a decline in GDP? The Ministry of Economic Development in its forecast expects a decline in annual GDP indicator in 2009 by 2.2%, suggesting that production will decline for at least the first two quarters. Under these assumptions and the V-shaped curve of production dynamics during the current year, the drop in GDP at the bottom (that is, in the second quarter of this year) relative to the peak of the third quarter of last year will be approximately 6% (in seasonally adjusted volumes), and, based on the elasticity of the unemployment rate to GDP is at the level of 5, the latter at the lowest point of the recession will not exceed 8 percent. If, under the same assumptions, annual GDP falls by 5%, then the bottom of GDP will decrease by 11% to the peak, and the unemployment rate at the lowest point of the crisis will exceed 10%. Finally, with the same 5% annual decline in GDP, but with an L-shaped recession bottom to peak of 7%, the unemployment rate is correspondingly lower, approximately 8.5%, but it remains so for at least three quarters until the end this year.

However, the value of these arithmetic exercises is not very high. It is possible that in the interval where we assessed the elasticity of unemployment to GDP, the same wait-and-see behavior of employers was partly observed as during the 1998 crisis, and the real sensitivity of unemployment to the recession will ultimately turn out to be much higher. Expert No. 11 2009

There are economic and non-economic economic consequences unemployment, which manifest themselves at both the individual and societal levels.

Non-economic consequences of unemployment are the social, psychological and political consequences of job loss.

At the individual level, they are that the inability to find a job for a long period of time gives rise to a feeling of personal inferiority, leads people to psychological stress, despair, nervous breakdowns, cardiovascular diseases, loss of friends, family breakdown, etc. The loss of a stable source of income can push a person to crime (theft and even murder) and antisocial behavior.

At the societal level they appear in the form of:

a) growth of social tension, up to political upheavals. Not by chance American President Franklin Delano Roosevelt, explaining the reason for his development and implementation of the New Deal policy to overcome the Great Depression, main problem which there was huge unemployment (one in four people were unemployed in the United States during this period), wrote that by doing so he wanted to “prevent a revolution of despair.” Indeed, military coups and revolutions are usually associated with high level social and economic instability;

b) an increase in the level of morbidity and mortality in the country, as well as the level of crime;

c) losses incurred by society in connection with the costs of education, vocational training and providing a certain level of qualifications to people who, as a result, are unable to apply them, and, therefore, recoup them;

d) the collapse of moral principles and ethics.

Economic consequences of unemployment also manifest themselves at both the individual and societal levels.

At the individual level, they consist of: loss of income or part of income in the present; in a possible decrease in income in the future due to loss of qualifications (which is especially bad for people in new professions) and therefore a decrease in the chances of finding a highly paid, prestigious job.

At the level of society as a whole, they consist of underproduction of gross domestic product, a relative deviation (lag) of actual GDP from potential GDP. The presence of cyclical unemployment means that resources are not fully used. Therefore, actual GDP is less than potential GDP (GDP at full employment of resources).

The deviation (gap) of GDP (GDP gap) is calculated as the ratio of the difference between actual GDP (Y) and potential GDP (Y*) to the value of potential GDP, expressed as a percentage:

Since the employed participate in the production of goods, but the unemployed do not, we can assume that an increase in the unemployment rate should be accompanied by a decrease in real GNP. The relationship between the deviation of actual output from potential output (at that time GNP) and the level of cyclical unemployment was empirically derived from a study of US statistical data over a number of decades in the early 1960s. economic advisor to President John Kennedy, American economist Arthur Oaken. The formula reflecting this dependence is called Okun's law:

where u is the actual unemployment rate;

u* - natural unemployment rate;

(u – u*) – level of cyclical unemployment;

b is the Okun coefficient (b > 1), showing by how many percent the actual output is reduced compared to the potential output if the cyclical unemployment rate increases by 1 percentage point.

Thus, Okun's coefficient is the sensitivity coefficient of GDP deviation to changes in the level of cyclical unemployment. For the US economy in those years, according to Okun's calculations, it was 2.5. In other countries and in other periods of time it may be numerically different. The minus sign in front of the expression on the right side of the equation reflects the inverse relationship between actual GDP and the level of cyclical unemployment: the higher the level of cyclical unemployment, the lower the value of actual GDP compared to potential.

The deviation of actual GDP (Y t) of any year can also be calculated in relation to actual GDP previous year(Y t-1). A formula for such a calculation was also proposed by A. Okun:

where u t is the actual unemployment rate for a given year;

u t-1 – actual unemployment rate of the previous year;

3% - average annual growth rate of potential GDP in developed countries, caused by an increase in the amount of resources (labor and capital) and technological progress;

2.5 is a coefficient showing by what percentage actual GDP is reduced when the unemployment rate increases by 1 percentage point in the absence of economic growth and is therefore a sensitivity factor for changes in GDP to changes in the annual actual unemployment rate.

Okun's Law – economic law there is an inverse relationship between
the level of cyclical unemployment and the size Country's GDP: If the cyclical unemployment rate increases by 1 percentage point, then in the absence of economic growth, actual GDP decreases by 2.5%, and vice versa.

It is also possible to determine not only the magnitude of the deviation in GDP caused by an increase in the unemployment rate, but also, conversely, the magnitude of the increase in the actual unemployment rate caused by a recession in the economy:

Consider the concept of “natural rate of unemployment.” Let L denote the labor force, E the number of workers, U the number of unemployed. Then:

To focus on the determinants of the unemployment rate, we assume that the size of the total labor force remains constant. Let s be the indicator of worker dismissal, i.e. the share of employed people who lose their jobs every month; f is the employment indicator, i.e. the share of unemployed people who find work each month. Let us assume that both indicators are constant and see that they determine the unemployment rate.

If the labor market is in a stable state, then the number of people hired should equal the number of people fired:

Replace E with (L – U):

f * U = s * (L – U).

Let's divide both sides of the equation by L:

f * U/ L = s * (1 – U/L).

Select U/L and get:

This equation shows that the unemployment rate (U/L) depends on the employment and attrition rates. Any economic policy, aimed at reducing the natural rate of unemployment, should help either reduce the level of layoffs or increase the level of employment.

There are economic and non-economic consequences of unemployment, which manifest themselves at both the individual and social levels.

Non-economic consequences of unemployment are the social, psychological and political consequences of job loss.

At the societal level they appear in the form of:

a) growth of social tension, up to political upheavals. It is no coincidence that American President Franklin Delano Roosevelt, explaining the reason for the development and implementation of the New Deal policy to get out of the Great Depression, the main problem of which was huge unemployment (every fourth person was unemployed in the United States during this period), wrote that by doing so he wanted to “prevent revolution of despair." Indeed, military coups and revolutions are usually associated with a high level of social and economic instability;

b) an increase in the level of morbidity and mortality in the country, as well as the level of crime;

d) the collapse of moral principles and ethics.

Economic consequences of unemployment also manifest themselves at both the individual and societal levels.

At the level of society as a whole, they consist of underproduction of gross domestic product, a relative deviation (lag) of actual GDP from potential GDP. The presence of cyclical unemployment means that resources are not fully utilized. Therefore, actual GDP is less than potential GDP (GDP at full employment of resources).

The deviation (gap) of GDP (GDP gap) is calculated as the ratio of the difference between actual GDP ( Y) and potential GDP ( Y*) to the value of potential GDP, expressed as a percentage:

Since the employed participate in the production of goods, but the unemployed do not, we can assume that an increase in the unemployment rate should be accompanied by a decrease in real GNP. The relationship between the deviation of actual output from potential output (at that time GNP) and the level of cyclical unemployment was empirically derived from a study of US statistical data over a number of decades in the early 1960s. economic adviser to President Kennedy, American economist Arthur Okun. The formula reflecting this dependence is called Okun's law:

where u is the actual unemployment rate;

u* - natural unemployment rate;

(u – u*) – level of cyclical unemployment;

b is the Okun coefficient (b > 1), showing by how many percent the actual output is reduced compared to the potential output if the cyclical unemployment rate increases by 1 percentage point.

Thus, Okun's coefficient is the sensitivity coefficient of GDP deviation to changes in the level of cyclical unemployment. For the US economy in those years, according to Okun's calculations, it was 2.5. In other countries and in other periods of time it may be numerically different. The minus sign in front of the expression on the right side of the equation reflects the inverse relationship between actual GDP and the level of cyclical unemployment: the higher the level of cyclical unemployment, the lower the value of actual GDP compared to potential.

Deviation of actual GDP ( Y t) of any year can also be calculated in relation to the actual GDP of the previous year ( Y t -1). A formula for such a calculation was also proposed by A. Okun:

where u t is the actual unemployment rate for a given year;

u t -1 – actual unemployment rate of the previous year;

3% - the average annual growth rate of potential GDP in developed countries, due to an increase in the amount of resources (labor and capital) and technological progress;

Okun's Law – the economic law of the presence of an inverse relationship between
the level of cyclical unemployment and the size of the country's GDP: if the level of cyclical unemployment increases by 1 percentage point, then in the absence of economic growth, actual GDP decreases by 2.5%, and vice versa.

Consider the concept of “natural rate of unemployment.” Let L denote the labor force, E the number of workers, U the number of unemployed. Then:

If the labor market is in a stable state, then the number of people hired should equal the number of people fired:

Replace E with (L – U):

f * U = s * (L – U).

Let's divide both sides of the equation by L:

f * U/ L = s * (1 – U/L).

Select U/L and get:

This equation shows that the unemployment rate (U/L) depends on the employment and attrition rates. Any economic policy aimed at reducing the natural rate of unemployment must either reduce the layoff rate or increase the employment rate.

Unemployment is a serious macroeconomic problem, so the government is taking measures to combat it. For different types of unemployment, since they are due to different reasons, different measures are used.

A common measure for all types of unemployment is the creation of employment services (employment bureaus).

The goal of many government programs is to reduce the natural rate of unemployment by reducing frictional unemployment. Specific measures to combat frictional unemployment speakers:

Improving the system for collecting and providing information on the availability of available jobs (not only in a given city, but also in other cities and regions);

Creation of special services for these purposes.

To combat structural unemployment measures such as:

Creation public services and institutions for retraining and requalification;

Help for private services of this type.

Fixed assets combating cyclical unemployment are:

Carrying out a countercyclical (stabilization) policy aimed at smoothing out cyclical fluctuations in the economy, preventing deep declines in production and, consequently, mass unemployment;

Creation of additional jobs in the public sector of the economy.

The unemployment insurance system is state program, which increases the number of frictional unemployed. Under this program, unemployed people can receive partial wages for a certain period of time after losing their job.

Law of Unintended Consequences - a law that reflects the property of state policy to have, along with expected, unforeseen consequences: unemployment benefits can cause an increase in the unemployed who are content with this benefit, etc.

By mitigating the economic impact of job loss, unemployment insurance simultaneously increases the number of frictional unemployed people and raises the natural rate of unemployment. Unemployed people receiving benefits are less actively looking for work and are more likely to reject what they consider unattractive offers, which reduces the rate of hiring. In addition, the existence of an unemployment insurance system probably makes it easier for employers to decide to lay off workers, thereby leading to an increase in the rate of layoffs.

The fact that unemployment insurance increases its natural rate does not in itself mean that the policy is undesirable. Its positive side is that it creates confidence among workers in receiving a certain income. Moreover, by allowing workers to refuse unattractive jobs, these policies are likely to help establish a better match between the characteristics of the labor force and the structure of jobs.

Economists who study unemployment insurance often propose ways to reform the system to reduce the number of unemployed people. One proposal would be to require that a firm that fires a worker pay full unemployment benefits for the worker. Such a system is called 100% compensation system , since each firm's contribution to unemployment insurance accurately reflects the extent of unemployment experienced by its own workers. Increasing compensation could limit widespread temporary layoffs.

The unemployment rate becomes stable for two reasons:

1) in the case of unemployment insurance (i.e. payment of unemployment benefits), the time required to search for a job increases. The incentive to look for work is reduced. Although the payment of benefits may facilitate the search for a job that would exclusively satisfy the interests and needs of those wishing to get a job, or obtain additional education. And this will influence greater stability of society in the long term. The role of the state is important here. In order to reduce the unemployment rate, it is necessary to allocate funds to finance the personnel retraining system and other measures.

2) the so-called “expectation unemployment”, which occurs in conditions of stable (“hard”) wages.

Wage rigidity means its inability to change flexibly enough to bring the supply of labor in accordance with the demand for it. When real wages are above the level corresponding to the equilibrium of supply and demand, supply in the labor market exceeds demand for it. Firms have to distribute a limited number of jobs among all applicants. Therefore the rigidity real wages reduces the probability of employment and increases the unemployment rate.

Unemployment as a result of wage rigidity and the resulting shortage of jobs is called unemployment waiting (in involuntary unemployment).

The source of involuntary unemployment is sticky or rigid wages, which disrupt the mechanism of supply and demand for labor. The types of involuntary unemployment are: technological, structural and cyclical unemployment.

Workers become unemployed because when this level wages, the supply of labor exceeds the demand for labor.

People do not want to receive lower wages for their work than the level of sustainable wages, and prefer to wait than to work for wages that, in their opinion, are inadequate for the work, or wages below the subsistence level (often people consider too low wages to degrade their professional and human dignity).

Under these conditions, the labor market “freezes.” “Freezing” of the labor market can be caused by:

1. Establishing a minimum wage by law. It is necessary to make a reservation that we are talking about a minimum wage that would exceed the subsistence level.

2. Fixation of wage levels in collective agreements with trade unions and individual labor contracts.

3. In some cases, enterprises are afraid to reduce wages, because They strive to retain qualified workers and fear a decline in labor productivity, labor discipline and profits. Enterprises also set incentive wages.

The socio-economic consequences of unemployment can be formulated as follows: depreciation and underutilization of the human potential of society occurs, the quality of life of the unemployed and members of their families deteriorates, pressure on the wages of the employed increases from those competing in the labor market, the costs of society and the individual for restoration or change increase. professional status and level of productive labor, categories of people with deviant behavior are formed, prone to actions that contradict accepted social norms and values. The relationship between unemployment and economic growth rates was studied by the American scientist Arthur Okun. The pattern he identified, called Okun's law, characterizes the potential losses associated with cyclical unemployment.

Okun's Law(law of the natural rate of unemployment) - if the actual unemployment rate exceeds the natural rate by 1%, the lag of actual GDP from potential is 2-2.5%.

In graphical form, this pattern is presented in Figure 6.2.

Figure No. 6.2. Okun's Law

Under conditions of full employment, the volume of production is equal to , and the unemployment rate is equal to . If employment declines and unemployment rises, production volume will also decrease. Based on all of the above, we come to the conclusion that the graph demonstrates a decreasing dependence of production volume on the unemployment rate.

8. Essence, causes and types of inflation. Measuring inflation. Demand inflation and cost inflation.

Inflation- this is a long-term process of reducing the purchasing power of money (increasing the general price level).

Inflation- this is an increase in the general price level, accompanied by a corresponding decrease in the purchasing power of money (depreciation of money) and leading to a redistribution of national income.

Deflation is a decrease in the general price level.

Inflation is the main destabilizing factor in a market economy. The higher its level, the more dangerous it is.

Inflation has a strong impact on economic agents, some win because of it, some lose, but most consider inflation to be a serious problem.

If we compare the nature of inflationary processes in the conditions of the metallic monetary system and in modern conditions, when paper and electronic money functioned, during the period of the gold standard, inflation occurred periodically: with a sharp increase in demand, associated primarily with wars. In modern conditions, the inflation process has become constant and periods of falling prices are now observed less and less often.

Causes of inflation Inflation is caused by monetary and structural reasons:

monetary: discrepancy between monetary demand and commodity supply, when the demand for goods and services exceeds the size of trade turnover; excess of income over consumer spending; state budget deficit; overinvestment - the volume of investment exceeds the economic capacity; faster wage growth compared to production growth and increased labor productivity;

structural reasons: deformation of the national economic structure, expressed in the lag in the development of industries in the consumer sector; decreased efficiency of capital investment and curbed consumption growth; imperfection of the economic management system;

external reasons - reduction in revenues from foreign trade, negative balance of foreign trade balance of payments.

Structural inflation is caused by macroeconomic intersectoral imbalance. Among the institutional causes of inflation, one can distinguish those associated with the monetary sector and those associated with organizational structure markets. In general, this set of reasons looks like this:

1. Monetary factors:

unjustified issue of money for short-term needs of the state;

financing the budget deficit (can be done through money issue or through loans from the central bank).