Fulfillment of okun's law in the city of Posadas, Argentina, using dynamic models

Abstract

The present paper contributes to the understanding to the functioning of the labor market in the city of Posadas, Misiones, Argentine Republic, and has as its objective to measure the relationship between the growth of the GGP of the Province of Misiones and the growth of unemployment in the same Province, by means of the use of the relationship known as of Okun's Law, using a dynamic specification. In the traditional static version one supposes the normal growth rate, for the whole period analyzed. However, said rate is modified due to variations in the marginal productivity of the work, a situation which is evidenced in the provincial economy as a result of the structural change caused by Convertibility. The dynamic specification of Okun's Law allows to capture the impact, of said changes in the marginal productivity of the paper. As a result of this paper such relationship is obtained that for each a point of growth of the GGP, above its tendency, it results in an unemployment rate decrease of 0.17%. Also, an asymmetry was established in the unemployment behavior which would evidence that when the economy grows 1%, unemployment drops 0.19%, and when the GGP drops 1%, always regarding its tendency value, unemployment increases only a 0.15%.