This paper investigates the behavior of Okun’s Law in the United States’ three largest metropolitan regions: New York City, Los Angeles, and Chicago. Two separate autoregressive distributed lagged (ARDL) model forms are tested to incorporate delayed impacts of prior real output growth and unemployment rate changes on oscillations in current unemployment rates. The first model comprises a simple ARDL model with first-order lags, while the second model incorporates two additional binary indicators for both quarterly recessions and post-coronavirus quarterly recovery periods. This paper finds that the impacts are significantly more pronounced in the three urban cores studied than for the United States as a whole, although the presence of the additional binary indicators modestly lowers the estimates. Dynamics such as more heterogeneous workforces and greater sensitivity to output shifts are attributed as important causes of these higher estimates, as well as the impact that density may have on worker turnover that contributes to more volatile labor markets.
JEL Classifications: E2 , J21 , R11