Okuns Law Essay Example | Topics and Well Written Essays - 1250 words

Okuns Law - Essay Example Arthur Okun clearly explained in numerical values the link between unemployment and output. Okun's Law states that "1 percent more unemployment is estimated to equal 2 percent less output" (Schiller G-4; "Okun's Law or Rule of Thumb" 60). This was also stated as "The higher the rate of growth of output, the greater the reduction in unemployment, and vice versa" ("Okun's Law or Rule of Thumb" 60). Does this Law apply to the prevailing economic condition Conversely, one can hypothesize that this law does not apply to the prevailing situation in the United States of America, and that 1 percent more unemployment does not jeopardize percentage of output. In the United States of America, circumstances often force people to persist on joblessness. For example, many work applicants are from the secondary level of education and only some college units. Most employers however of the 21st century economy prefer information technology literacy in addition to completed college education. Also, the volume of products as output of inputted goods and services are dependent on the availability of the components of goods to be produced, and the availability of employees with hi-tech awareness (Schiller 127). An even depressing marker is the fact that goods for production may be for consumption or for investment. In case the capital will be used for consumables only, then nothing will be allocated for investment goods and vice-versa. This is the situation when capital is limited. Plus, despite increasing population, labor force have not increased, so the potential for output from out of the population is very well below the output needed to support the population (Schiller 127-128). These facts show that most people must have to be responsive of existing conditions on balance between employment and output or Gross Domestic Product. One good way of being responsive to existing conditions is to be pragmatic with limitations on availment of objects used as resources and expertise. These limits set boundaries on productivity. Additionally, if more people will find jobs in exchange for wages, then, more will be the input for labor necessary for production. In other words, balance between employment and output or Gross Domestic Product can be achieved with the minimization of boundaries set by the government and other concerned non-governmental groups on utilization of the natural resources and expertise (Schiller 128). Another front which could be harnessed to raise productivity is the unaccounted portion of labor. These are the full-time mothers, the full-time students, the teen-agers, the children, the sick, the disabled, and those who are working within a family business, but are not paid wages for doing jobs (Schiller 126; Frumkin 1987). Practically, these people are parts and parcels of the consumers and demand side of the economic market, yet they have no direct productivity in terms of income generation. In fact they may even be the bulk of the population that is reliant on the working groups' productivity. Plus, they are apparently the population who spends more and consumes more than those who are employed. Real life economic growth could hardly be achieved then, unless something is done with the dependent population in the American society. Gauged by the facts that unemployment economically