The relationship between GDP growth and unemployment. Testing the Okun's law in Kazakstan

Rustem Mukhanov

Bachelor's thesis

Abstract:

The main purpose of the thesis is to determine the level of unemployment in Kazakhstan, as well as its impact on the economic situation of the country. In addition, the goal is to try to prove the applicability of Okun’s law on the relationship between the Gross Regional Product and unemployment in Kazakhstan based on the calculations of past years. The theoretical part describes all kinds of unemployment, as well as the current situation in terms of the level of the unemployed in Kazakhstan and their causes. The practical part includes the estimation of Okun’s models based on Kazakhstan’s case. The dataset is presented in form of panel data; therefore, panel regression models were constructed by using R studio software. All calculations are done on a regional level; therefore we use the regional rate of unemployment for each region and Gross Regional Product to express economic growth. The first Okun’s model is the first-difference model, which contains the simultaneous correlation between variables and is considered a “classical version” of Okun’s law model. The second Okun’s model or the “dynamic” model includes lagged values of explanatory and dependent variables. As a result, the estimated models proved the assumption that economic growth is associated with a decline in the unemployment rate and that Okun’s law is applicable to the case of Kazakhstan.

Keywords

Unemployment, Economic Growth, Kazakhstan, Okun's law, Economic Policy

Language used: English

Date on which the thesis was submitted / produced: 17. 3. 2023

Thesis defence

• Date of defence: 23. 5. 2023
• Supervisor: doc. Ing. Inna Čábelková, Ph.D.
• Reader: Leopold Tanner, MBA

Czech University of Life Sciences Prague

Faculty of Economics and Management

Bachelor programme:
Economics and Management