Okun's law

Okuns law,

Definition of Okuns law:

  1. Empirical relationship in economics whereby every three percent drop in the ratio of actual GNP to the full capacity GNP causes about one percent increase in unemployment. Discovered by the US economics professor, Arthur M. Okun (1928-80).

  2. A rule which states that the degree to which actual productivity falls short of (or exceeds) long-term potential productivity is directly related to increased (or decreased) unemployment.

Meaning of Okuns law & Okuns law Definition