Female labour supply, unemployment and okun's law in Europe

Resumen

Taking the notions of the added and the discouraged worker as a starting point, this paper sets out unemployment rates for women in the major European countries where the effect of the economic cycle on their decisions concerning labor supply is taken into account. A theoretical model is first of all elaborated which is characterized by the consideration of an analytical framework of involuntary unemployment in which the hypotheses of the added and the discouraged worker are included. Taking this model as the starting point, an empirical analysis is then carried out in which unemployment rates are elaborated which do not show the bias due to the cyclical evolution of the female labor force. Finally, the coefficient of Okun's Law is estimated using these "corrected" rates of unemployment and it is compared with the coefficient using the official rates of unemployment. In general, a greater reduction in the rate of unemployment than the official statistics might indicate is obtained when the aggregate production shows an increase. This would suppose that the economic policies which stimulate growth in the production have a greater effect on unemployment than was initially estimated.