Employment and growth: An estimation of Okun’s Law for Ecuador 2003-2019

Abstract

The objective of this research is to analyze the effect of changes in gross domestic product on the unemployment variation dimension in Ecuador during the period 2003-2019 based on the methodology designed by Okun. The results indicate a negative relationship between the variables. In this way, an increase of one percentage in the real product reduces the unemployment rate between 0,13 % and 0,23 % considering the data for the period 2003-2019 and between 0,17 % and 0,21 % considering the data from 2007-2019. The results suggest that the application of Okun’s methodology demonstrates an inverse relationship between the variation in GDP and unemployment and offers relevant information for the analysis of the dynamics and relationship of the labor market with economic growth.