THE RELATIONSHIP BETWEEN THE UNEMPLOYMENT RATE AND ECONOMIC GROWTH: BASED ON A. OKUN'S LAW AND THE THEORY OF NATURAL UNEMPLOYMENT

Abstract

This article discusses the economic content of unemployment, methods for measuring its level, as well as the essence of the theory of natural unemployment. The existence of frictional and structural unemployment in the labor market is explained. The article analyzes the economic consequences of unemployment - a decrease in production, a decrease in national income, and a negative impact on social stability. It is also substantiated that, according to A. Okun's law, each percentage increase in the unemployment rate above the natural rate leads to a certain decrease in gross domestic product. This theoretical approach is of great importance in determining the economic cost of unemployment and developing labor market regulation policies. The results of the study show that improving employment policy, improving labor force skills, and increasing labor market flexibility are effective ways to reduce unemployment.