Okun's law states that there is negative relationship between change in output and change in unemployment. But this recession has produced result that is quite contrary to this and has created puzzle. Germany has seen more than 7% fall in output but decrease in unemployment whereas Spain has seen more than 7% rise in unemployment with around 4% fall in output. We can easily see from the Document attached that country which are suffering very badly For example PIIGS has seen more rise in unemployment that is warranted by their fall in output. It is thus clear that institutional and social arrangements are working in labor market and countries have different impact due to that.