Exploring The Universality Of Okun's Law In China

Promoting the economic growth and decreasing the unemployment rate should be taken into account primarily when the state's government plans and implements macroeconomic policy. Okun's Law shows that high output growth is associated with reduction in the unemployment rate; low output growths are associated with an increase in the unemployment rate.As an empirical rule, Okun's law has been proved across many west economies. The Okun's Law explained that economic growth and unemployment issues can be settled simultaneously by carrying out macroeconomic policy in the United States. Economic development is not coupled with employment rate in China. From the middle 1990s, Chinese economics run on high speed while the unemployment rate has no notable decline. The phenomenon departs from the classical theory of Okun's Law.Firstly, the paper describes the reverse relation between the unemployment and economic growth rate in the western economy, and analysis the suitable precondition of Okun's Law. The paper infers that there are limitations of Okun"s law in some fields. Taking US as an example, the paper seeks the deep reasons of the limitations through technological innovation, human capital, and so on, which improves the productivity.Secondly, according to special situation of China, the paper discusses the phenomenon on the base of the Chinese national condition. In China, the ecosystem's carrying capability is limited, the amount of resources is also limited, and energy and resources is always the serious challenge faced by us. The paper analyzes different alteration relations between the economic growths and unemployment in different resources conditions and testifies non-universality of the Okun's Law. Then this paper analyses the current unemployment and output growth situation.And finally, this paper analyses that it is true in China to promote employment and constraints of resources through development of enterprise.