Human wants are generally insatiable, yet the means of ensuring these wants are limited simply because the world has only limited amounts of resources which comprise of human wants that are grossly limited both in number and skills (this is where unemployment arises). Recession happens if output in the economy reduces, this is to say that growth becomes negative. When people spend less, shops will be left with unsold stocks, which will result in purchasing less from the producers, which in turn will cut down on production. Unemployment is likely to result from cutbacks in production. When firms produce less, they need fewer employees.
Several countries regardless of their economic status have experienced various degrees of unemployment since the economic downturn in 2007. The U.S economy had an unemployment rate of 9.2% as at June 2011, Egypt with a 19% unemployment rate and the Saudi economy of 10%. This is very costly economically because it represents a loss in the GDP.
The classical theory analyzed by Pigou (1993) and Solow (1981) argues that the labor market consists of demand and supply of labor. The demand curve is a negative function of real wage in that if wages increase, the quantity demanded for labor will decline and the opposite is correct. Because one is employed does not mean that others are not unemployed. Cheaper labor to entrepreneurs is the most effective way to reduce unemployment. Technological advancements will cause a rise in the number of unemployed but these unemployed will also search for other jobs but this search is likely to reduce wages. Wage reduction is not a complete way to increase employment. Organizations look out for skilled workers who in turn look for better paying jobs which leaves ever...
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...en the degree of social guidance and the unemployment rate of today. For example, the Netherlands has returned to low unemployment while offering high social guidance.
In conclusion, an environment in which aggregate negotiation is central to wage determination, not only formal labor market institutions but also good labor groups are important to reducing the rates of unemployment.
Reference
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John, S. and Dean G. (2010), ‘Essentials of Economics’, 5th edition, Harlow: Pearson Education.
Olivier, J.B. (2004), ‘Explaining European Unemployment’, The National Bureau of Economic Research, [online], Available from: http//www.nber.org/reporter/summer04/Blanchard.html, (accessed 16 March 2014).
Whiteside, Noel and James Gillespie. "Deconstructing Unemployment: Developments in Britain in the Interwar Years," The Economic History Review, Vol. 44, No. 4. (Nov., 1991), pp. 665-682.
Low demand in the goods market would mean low overall output, and therefore low demand for labour, over the last 20 years, demand has raised overall hence demand deficient unemployment will reduce. During times of recession there is very little output and not many people are needed in the workforce. This leads to high unemployment levels. This situation arose in the late 1980s and early 1990s, when there was a recession.
"Macroeconomics/Employment and Unemployment." Macroeconomics/Employment and Unemployment - Wikibooks, Open Books for an Open World. N.p., n.d. Web. 04 July 2017.
The labor market entails the relations between the demand for labor, in one hand, and labor supply, on the other hand. Labor demand is defined by the amount of labor firms demand in order to produce certain amount of goods and services. Labor supply refers to the productive segment of the population that is determined by the size of the population. Within the labor market, workers can be classified as either economically active (the employed and the unemployed) or economically active. The employed encompasses people in paid employment or in self employment while the unemployed refers to people who are not working but have actively been looking for job and are willing to start work immediately. A person is classified as economically inactive if they are neither looking for work nor are they ready to start work. The labor force participation and the unemployment rate are major indicators of the health of an economy. This paper will compare the economies of the United Kingdom and Germany as well as their labor market (Shimer 2010).
The business cycle is the short-run alternation between economic downturns and economic upturns (Investopedia n.d.). A recession is an economic downturn and happens in every country and some recessions are worse than others and the output of GDP and employment are falling farther and faster. The great depression lasted from 1929-1933 and was a deep prolonged downturn in the business cycle before a recovery/expansion of the business cycle occurred and GDP and employment started to rise (Krugman & Wells. 2012). The next recession lasted from 1981-1982 and was comparatively smaller than the first (Krugman & Wells. 2012). More recently in 2001 a slump in the economy was noted and was followed by the great rescission of 2007-2009 (Krugman & Wells. 2012). Recession is defined as a “period of at least two consecutive quarters (a quarter is three months) during which the total output of the economy shrinks” (Krugman & Wells. 2012). In the United States the National Bureau of Economic Research (NBER) is assigning the task of determining when a recession begins and the NBER looks at a variety of economic indicators such as employment and production (Krugman & Wells. 2012). Every business cycle recession has a negative impact on the economy the recession’s deferrer on the strength of the impact on the country. Consider the two charts for Figure 21-5 of the more recent recessions of 2001 and 2007. The Recession of 2001 did not last as long as the recession of 2007 and did not have as much of an economical hardship on the business cycle and as shown 2007 dipped greatly in industrial production. In the second chart it demonstrates a recession at the point the economy turns from expansion to recession or the business-cycle peak. Then in the char...
Unemployment refers to the total percentage of a country’s workforce that is unemployed and is looking for a paid job. The rate of unemployment is the percentage of the whole population that is actively seeking paid employment (Coyle 2). The ratio is reached at by dividing the number of jobless people by the already working individuals in the workforce. In statistics, a rising unemployment rate is an indicator of a weakening economy (Mankiw 16).On the other hand, a falling rate indicates that the economy is growing.
It has been 5 years now, but the world economy is still hovering over with ill effects of global economic recession. Different economist define recession in a different way but one common definition which can be derived is that recession is long lasting and prime reason for slowdown to economic activity(GDP). In terms of measuring the effects of recession, the broadest indicator of economic activity is real gross domestic product(GDP). Our following section will discuss how the economic activities in US has actually decreased since the beginning of market turmoil.
Labour market inflexibility in Europe is the main reason why Europe is not as dynamic an economy as the United States” Critically discuss. “Labour market inflexibility in Europe is the main reason why Europe is not as dynamic an economy as the United States” In not more than 2500 words and not less than 1500, critically discuss the above statement. Introduction Today labour markets in Europe and the USA are often compared and discussed. The general view seems to be that the US has a more dynamic economy, people tend to believe Europeans are worse off than Americans.
For what has been a very, very long time, our elected representatives have sought to achieve “full employment” as a national goal….but full employment has been suspect as a possible cause of inflation, and is therefore weakened by decisions of the Federal Reserve, in an attempt to retard inflation. In terms of causes, unemployment has changed; the character, degree of severity, possible solutions of unemployment over the last ten years or so have been reduced, and has morphed in terms of just who is experiencing the unemployment and the suggestions for answering the problem. It has been the traditional fundamental trades, like manufacturing, viewed as part of the shift in the economy towards the new information age model, as workers transition from a manufacturing economy to a service economy, all the while over-coming the obstacles set forth by our own government.
An economic management issue in the public sector is unemployment (or joblessness) occurs when individuals are without work and actively applying and looking for work. The unemployment rate is a measure of the prevalence of redundancy and it is calculated as a percentage by dividing the quantity of those unemployed by all individuals currently in the labor force. Throughout periods of recession, an economy usually encounters a relatively high unemployment rate. According to International Labor Organization report, “more than 197 million individuals globally are not in workforce or six percent of the individuals were without a job in 2012.” (Allegretto & Lynch, 2010) Persistently high rates of unemployment in Europe throughout the last two decades show that unemployment is, at least to a reasonable degree, not just business cycle anomaly. This reflects a proceeding waste of labor and of human capital in most European nations and the United States. It appears reasonable to inquire, if given levels of unemployment impact long-run productivity growth or the long-run level of productivity itself. While unemployment is an extreme issue in Europe, not in the U.S., the decrease in productivity growth has been stronger in the United States. “Between 1979 and 1997 the average rate of unemployment in the US was 6.7% and the average growth rate of labour productivity was 0.9%. In Europe the average rate of unemployment was 9.3% and the average growth rate of labor productivity was 2.2%.” (Allegretto & Lynch, 2010) The reason given for these facts is: high wages lead firms to substitute labor with capital. This can lead to increasing unemployment and productivity since the workers who are still utilized become more productive Therefore, it is ...
This source is a chart with statistics directly from the Bureau of Labor Statistics regarding unemployment rates in the U.S. in 2010 and 2011 It separates the population by age, sex, race and ethnicity. This information is geared towards people looking for precise numbers and statistics because it give the data but does not explain the numbers to the readers.
Unemployment is a macroeconomic factor that is pertinent to an extensive economy at a regional level. Therefore it affects a large population rather than a few select individuals. Unemployment does not only have social costs, but economic costs too. The ILO, International Labour organization, defines unemployment as, ''People of working age, who are without work, but available for work and actively seeking employment.'' Therefore implying that it is a state of an individual looking for a job but not having one. Unemployment is one of the key indicators in determining the economic stability of a country; hence governments, businesses and consumers closely monitor it. There are numerous aspects that might lead to unemployment such as labour market conflicts and recessions in the economy. There are two main types of unemployment, which can be focused on, seasonal and cyclical unemployment. Seasonal unemployment occurs when a person is unemployed or their profession is not in demand during a particular season. On the contrary, cyclical unemployment occurs when there is less demand for goods and services in the market so consequently supply needs to be decreased.
Mouhammed, A. H. (2011). Important theories of unemployment and public policies. Journal of Applied Business and Economics, 12(5), 100-110.
Lower GDP for the economy also one of the consequences of unemployment in current time. High rate of this issue implies the economy is operating below full capacity and inefficient so that it will lead to lower output and incomes. Because people who are searching for their work usually will spend less in purchasing goods and
Daly, Mary, Bart Hobijn, and Rob Valletta. 2011. “The Recent Evolution of the Natural Rate of Unemployment.”