The labor market in Costa Rica has been experiencing an average unemployment rate of 9.37% in the last six years
even though its real product has grown near 2% – 4% during the same period. There are three factors that have made
it possible for unemployment to remain high in a continuous and prolonged manner: youth unemployment between
the ages of 15 to 34 years old, the low level of education amongst the youth demographic, and the unemployed persons
resulting from the business cycle. Thus, the applicability of Okun’s Law for Costa Rica has been tested through
the econometric analysis of the difference and gap versions of this law. Costa Rica should achieve levels of 2.5 p.p.
– 2.7 p.p. of its real growth for the unemployment rate to decrease marginally.