The Labor Market and Output in Bangladesh: Does Okun's Law Stand Still?

Unemployment, an important macroeconomic problem plays a crucial role in developing
economies. High unemployment gives signal that labor resources are not being used
efficiently. Hence, targeting full employment should be a major macroeconomic aim of any
government. In macroeconomic literature there is a well known premise called Okun’s
Law, which states the negative relationship between unemployment rate and real GDP (or
economic growth). The core purpose of this paper is to evaluate the relationship between
unemployment and real GDP considering Bangladesh as a case study. The sample covers
annual data from 1972/73 to 2011/12. This paper examines whether there exists an Okun
type relationship between this two macro variable in BD economy. The empirical results
show that the negative relationship between output and unemployment is present. And
there is no long run relationship between economic growth and unemployment.