Unemployment is of different types and their causes are also of different types. Insufficient effective demand for goods and services in an economy is the main cause of cyclical unemployment according to Keynesian economics…
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Advocates of Structural economics argue that unemployment is the result of structural problems in economy such as inefficiencies, inherent in the labor market. Disruptive technologies and globalizations also cause unemployment because many workers don't fit in the new jobs that are new technology oriented in which old workers are not trained. Globalization makes the jobs outsourced from other countries making the domestic workers redundant. In downturn phase of an economy wages are generally high because of sticky demand of workers for higher wages and unions disruptive attitude of workers. Advocates of Monetary economics focus on money supply excessive expansion that is responsible for inflationary situation in the economy as the main cause of unemployment.
In laissez fair economy every seller gets a buyer at some price called the clearing price. Sellers and buyers may refuse the clearing price voluntarily. But in regulated market the scenario is different.. General Theory claims that the concept of say's law is not practical. Unemployment that is involuntary does not exist. Unemployed person must meet their needs for survival and government of the country supports them to find employment through various schemes. According to classical economics demand for and supply of labor determine the price and employment level is set by these forces. Demand being more will push the wages and employment up and vice versa. Both monetary and fiscal policies can be used to increase short term growth of economy and the following employment level. Supply side is often affected by labor unions. Flexible policies, government attitude, reforms, education make labors supply more flexible that in turn increase supply of goods and increase employment level.
Either all these explanations and theories may fit in to answer the unemployment variance in G5 countries or only some of them may be the relevant answer. Unemployment level in G5 countries during 1998-2008 has been different. In USA, Europe and Japan the unemployment levels were at half the rate than in France and Germany. There are three European economies, one American and one Asian in G5. Unemployment trend in USA had been falling from nearly 5% in average in 1992 to marginally above 4% in 2007. For January 2008 in the U.S. the unemployment rates were 4.4% for adult men, and4.2% for adult women.. In Japan the rate has come down from 2003 at 4% to 2% in 2007. In Germany the unemployment rate has been falling since 1993 from nearly 10% to about 4% in 2007. In France the unemployment rate has remained high and fell marginally in2007 only to be above 7%. Traditionally USA experiences lower unemployment levels than countries in Europe. UK and Denmark outperforming Italy and France and it also changes over time throughout economic cycles
In Germany unemployment level peaked in 2005 at 10.6 and then fell down up to 7.4 in 2008. The rate of fall is quite sizable from 7.38% to 14.83%. As per Philips Curve employment and inflation are interrelated. Demand stimulus through expansionary policy could increase employment without leading to higher inflation. Here in this case unemployment rate went increasing and inflation rate also remained low. Thus the Philips Curve mechanism does not fit in case of German unemployment development.
"Phillips curve suggests that there is a menu of
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Total reasons for lack of employment could include any number of factors, such as a lack of desire to find work due to other economic avenues or support systems. It could also include those who are ineligible for work, due possibly to age or infirmity. Quantitative measures of unemployment statistics must include those who are otherwise fit enough to work, of an appropriate age and status, and are voluntarily seeking employment.
Individuals differ in certain unmeasured variables that, if not properly controlled, have influential impact on levels of unemployment. There exists, however, no universally acceptable definition of unemployment so far because both employed and unemployed people worldwide are measured quite differently.
One must be aware of the technical and definitional pitfalls in a controversy over American employment statistics, which is involved in a preparation of series of a single unemployment rate. It is one of the arduous jobs to compare unemployment rates within a country as it consists of huge amount of statistical data.
Unemployment has a myriad of consequences that affect the unemployed and the nation at large, this range from economic, social and even psychological problems. This paper will focus on some of the psychological and social effects and negative consequences of unemployment in modern day.
The LM curve joins together combinations of interest rates and national income at which the monetary sector is at equilibrium, when there is equilibrium in the money market then the amount of money demanded is equal to the quantity of money supplied. There are factors that determine the position of the LM curve.
Business owners pick up the tab thus reducing their profits. The theory suggests that if this same money were retained by wealthier individuals, the business owners, it would more likely sit in a bank or be locked-up in an investment of some sort. On
al unemployment occurs when job seeker’s skills are not in demand due to over specialization in a single field, geographical obsolescence, technological changes or structural change of the economy. For instance, decline of coal usage led may coal miners unemployed and they
United States Bureau of Statistics announces unemployment data in the start of each month. The report encompasses unemployment counts in all the sectors of economy. The Bureau conducts surveys through interrogating households and perusing data
contributes to unemployment because individuals who live on housing benefits opt to live that way as compared to doing short term jobs that will result in the termination of these benefits (Hobson, 2011). This reason explains why London has the highest average unemployment rates
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