chapter  23
10 Pages

Selective Employment Subsidies: Can Okun’s Law Be Repealed?


Concern that structural factors impede efficient labor market performance is evidenced in both statistical analyses of economic potential and policy pro­ posals for selective employment subsidies. Estimates of the level and expected growth of full-employment GNP have recently been revised downward, as has the 3.2 unemployment multiplier implicit in Okun’s Law (see U.S. Council of Economic Advisers and George Perry). These indications of structural changes labor markets reinforce statistics showing excessively high unemployment rates for youths and blacks, and labor force participation rates that are increasing for women and decreasing for men.