Okun’s Laws Differentiated by Education
Résumé
Our aim in this note is to set Okun’s Law in a new perspective. We argue that highly
educated labour should react differently to economic downturns and recoveries than lessereducated
labour. A simple model shows that when highly educated workers are engaged in long-run
projects, the adjustments of their (un)employment to GDP changes become ambiguous. If the access
to capital is not too affected by the cycle, these adjustements can be the opposite of the employment
changes of the lesser- educated workforce. Estimations for the United States, the European Union
and across Europe support the coexistence of different Okun’s laws according to educational
attainment. This observation may help to explain recent puzzling macroeconomic facts.