An Empirical Robustness of Okun’s Law in South Africa: An Error Correction Modelling approach

Moroke, Ntebogang Dinah; Leballo, Gontse Patricia; Mello, David Mbathi

doi:10.5901/mjss.2014.v5n23p435

Cited by 7 publications

(6 citation statements)

References 16 publications

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“…The study up held the findings of the relationship to be negative (Geldenhuys, 2007). The finding ran contrary to the findings that Okun's law is not applicable in South Africa (Moroke, 2014). This study found evidence of the superiority of the Dynamic version over the Difference version.…”

Section: Discussion Of Findings and Conclusioncontrasting

confidence: 99%

Economic Growth and Unemployment Nexus: Okun’s Two-Version Case for Nigeria, South Africa and United States of America

Onakoya

Seyingbo

2020

JEBS

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Okun’s law in its original form was predicated on the experience in the United States of America. Some methodological refinements have been added based on studies conducted in other climes with varied results. This research investigated the applicability of this law in Nigeria, South Africa and the United States of America. The study conducted a comparative analysis of three of the versions of the law. The research employed Ordinary Least Squares method having validated it’s appropriateness with Dickey-Fuller and Philips-Perron tests. The demonstrated superiority of the dynamic version over the difference version was manifest in all the countries. The result also showed that the dynamic version of the law was applicable in the three nations while the difference version showed the lack of linkage between economic growth and unemployment only in Nigeria. Deployment of employment creative employment schemes, labour market reform and economic restructuring are recommended in the Nigerian case. The policy makers on South Africa and USA are enjoined to pursue growth- inducing policies.

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Section: Discussion Of Findings and Conclusioncontrasting

confidence: 99%

Economic Growth and Unemployment Nexus: Okun’s Two-Version Case for Nigeria, South Africa and United States of America

Onakoya

Seyingbo

2020

JEBS

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“…Firstly, we found the expected negative and significant long-run as well as insignificant short-run estimates on the GDP variable for all four classes of unemployment. Clearly this finding corresponds to Okun's law which previous empirical supporting evidence for this relationship has been provided by Geldenhuys and Marnikov (2007) and Phiri (2014) but differs from the findings obtained in Moroke et al (2014) and Banda et al (2016).…”

Section: Macroeconomic Variables As Determinants Of Unemploymentsupporting

confidence: 67%

“…One of the oldest theories linking unemployment with economic activity is Okun's (1962) law, which assumes a negative relationship between unemployment and economic output. Notably this relationship has received much empirical support in industrialized economies such as the United States (Grant, 2018;Guisinger, Hernandez-Murillo, Owyang, Sinclair, 2018), Spain (Porras-Arena, Martin-Roman, 2019), OECD countries (de Mendonca, de Oliveira, 2019) and yet has received very little empirical support for the South African economy (see Moroke, Leballo, Mello, 2014;Banda, Ngirande, Hogwe, 2016). Another popular theory describing the dynamics of unemployment across the steady-state comes courtesy of the Phillips curve which assumes an inverse relationship between inflation and unemployment.…”

Section: Fiscal Monetary and Macroeconomic Determinants Of Unemployment As Dictated By Literaturementioning

confidence: 99%

South African Unemployment in the Post-Financial Crisis Era: What are the Determinants?

Mbekeni

Phiri

2020

Folia Oeconomica Stetinensia

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Research background: High unemployment rates are one of the greatest economic challenges facing the post-apartheid South African government over the past two decades and this problem has become more worrisome in the post-global financial crisis period. Purpose: Our study examines the determinants of unemployment for the South African economy in the post-crisis period over a quarterly frequency period of 2009:Q1 to 2018:Q4. The determinants are examined for four classes of unemployment rates (total, male, female and youth) and we further partition possible unemployment determinants into fiscal, monetary and macroeconomic variables. Research methodology: We employ the autoregressive distributive lag (ARDL) models. Results: We find income tax, repo rates, economic growth, trade, investment, household debt and savings to be significant determinants of unemployment in the post-crisis South African economy and yet we note discrepancies of the significance of these determinants amongst different unemployment categories. Novelty: No study has examined the determinants of unemployment in South Africa in the post-financial crisis era.

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“…Geldenhuys and Marinkov (2007) found that unemployment is inversely related to output in the South African economy over the 1970 to 2005 period and there was evidence of asymmetry in the Okun's relationship. But, Moroke, Leballo and Mello (2014) explored the relationship between unemployment and economic growth of South Africa from 1990Q1 to 2013Q4. The study showed that Okun's coefficient did not conform to the expected sign; thus, affirming that Okun's law is irrelevant in South Africa.…”

Section: Literature Reviewmentioning

confidence: 99%

Investigating Okunâ€™s Law in Nigeria through the Dynamic Model

Adeyeye

Odeleye

Aluko

2018

JEBS

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Unemployment is a persistent challenge for countries, especially the developing ones. Nigeria as a developing country faces a herculean task reducing the increasing spate of joblessness amongst her citizens. Okunâ€™s law explains the relationship between unemployment and economic growth in an economy. This study therefore investigates Okunâ€™s law in Nigeria between 1985 and 2015 through the dynamic model. The generalized method of moments estimation result reveals that that present and past output growth are negatively related to unemployment rate. However, only past output growth has a significant effect on unemployment rate. It also shows that past unemployment rate is significantly and positively associated with present unemployment rate. The Toda-Yamamoto Granger non-causality test finds that there is no causality between unemployment and economic growth. This study presents evidence to partially support Okunâ€™s law of inverse relationship between unemployment and output growth and suggests that promoting economic growth can be a policy tool for reducing unemployment rate in Nigeria.

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An Empirical Robustness of Okun’s Law in South Africa: An Error Correction Modelling approach

Abstract: Key intension of this paper was to verify Okun's law in the South

Cited by 7 publications

References 16 publications

Economic Growth and Unemployment Nexus: Okun’s Two-Version Case for Nigeria, South Africa and United States of America

Economic Growth and Unemployment Nexus: Okun’s Two-Version Case for Nigeria, South Africa and United States of America

South African Unemployment in the Post-Financial Crisis Era: What are the Determinants?

Investigating Okunâ€™s Law in Nigeria through the Dynamic Model

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