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Exploring Okun’s Law during COVID-19: did divergent US state responses shape economic shifts?

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  • Adolfo Maza

    (Universidad de Cantabria)

Abstract

This paper examines the impact of the recent COVID-19 pandemic on Okun’s Law enforcement in the USA. The previous results have revealed an increase in Okun’s coefficient in absolute terms at the country scale (Russnak et al., Russnak et al., Econ Bus Lett 12:165–171, 2023). Our article explores, adopting a regional focus, whether this strengthening has depended on the degree of restrictions imposed, as the USA presents a particularly relevant case study due to the significant differences in measures implemented across states. The results first confirm that Okun’s coefficient increased not only at the national level but also, arguably, in all states—or almost all states, depending on the approach—although with varying intensity. Furthermore, our analysis reveals a direct relationship between the intensity of the restrictions and the increase in Okun’s coefficient: the stricter the anti-COVID controls, the more abrupt the subsequent rise in unemployment for any given output decline. These findings are robust from multiple perspectives: methodologically (using MG and AMG estimators), with regard to the inclusion of state-level differences in industrial structure, the consideration of cross-border policy spillovers, and the combination of restrictions and economic support.

Suggested Citation

  • Adolfo Maza, 2026. "Exploring Okun’s Law during COVID-19: did divergent US state responses shape economic shifts?," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 75(1), pages 1-25, March.
    • Handle: RePEc:spr:anresc:v:75:y:2026:i:1:d:10.1007_s00168-026-01472-z
    DOI: 10.1007/s00168-026-01472-z
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • N11 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - U.S.; Canada: Pre-1913

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