Unemployment
What are the different types of unemployment?
- real wage unemployment (supply greater than demand
leading to workers pricing themselves out of jobs)
- frictional unemployment (workers are between jobs and
are searching)
- seasonal unemployment (tourism, agricultural industries
etc)
- structural unemployment (change in demand leading to
occupational, training, and geographical conflicts)
- technological unemployment (machines are replacing
humans in jobs)
- cyclical unemployment (low demand for workers such as
during recession)
What are the causes of unemployment?
- demand - insufficient spending power in the
economy
- supply - lack of skills and motivation
What are the solutions for unemployment?
In Keynesians view, in a recession:
- increasing government spending to boost aggregate
demand, or
- decreasing taxes to boost consumer spending
In the Supply side view:
- ensure market determined wage rates across all
sectors
- enhance mobility of labor
- enhance incentives to accept jobs (low tax rates,
tighten social security entitlement)
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