Okun's law

proper noun

An empirically observed relationship between unemployment and losses in a country's production. The "gap version" states that for every 1% increase in the unemployment rate, a country's GDP will be roughly an additional 2% lower than its potential GDP. The "difference version" describes the relationship between quarterly changes in unemployment and quarterly changes in real GDP.

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Meanings

proper noun
  1. economicsAn empirically observed relationship between unemployment and losses in a country's production. The "gap version" states that for every 1% increase in the unemployment rate, a country's GDP will be roughly an additional 2% lower than its potential GDP. The "difference version" describes the relationship between quarterly changes in unemployment and quarterly changes in real GDP.

Origin

Named after Arthur Melvin Okun, who proposed the relationship in 1962.

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Cite this entry
APA

Okun's law. (n.d.). In WatkinsX Dictionary. Retrieved November 5, 2026, from https://dictionary.watkinsx.com/word/Okun's%20law

MLA

“Okun's law.” WatkinsX Dictionary, https://dictionary.watkinsx.com/word/Okun's%20law. Accessed November 5, 2026.

Chicago

WatkinsX Dictionary, s.v. “Okun's law,” accessed November 5, 2026, https://dictionary.watkinsx.com/word/Okun's%20law.

Source: Okun's law on Wiktionary, CC BY-SA 4.0.