An Analysis of the Okun′s Law′s Applicability in China

Okun′s Law which is considered as the most notable empirical law in the macroeconomics reveals the inverse correlationship between economic growth rate and unemployment rate.Compared with the normal(potential or tendential) growth rate,the faster economic growth is,the lower unemployment rate will be.And vice versa,the low rate of economic increment has close relationship with the increase of unemployment rate.This paper finds out the GDP growth rate and registration unemployment rate in China from 1978 to 2007.There is a malfunction in the application of Okun′s Law in China for such reasons as unhealthy economic development,the deviation in statistical standard and the mass existence of stealth unemployment.