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The Pros And Cons Of Unemployment

explanatory Essay
1018 words
1018 words
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In the United States, unemployment is a topic that is constantly brought up. This is especially so during elections, as each candidate will typically make a variety of promises to create jobs and reduce unemployment. These claims are made because citizens deeply care about unemployment. High unemployment sends a message to everyone that there simply isn’t enough jobs, and that causes unease for both the unemployed and the employed who worry about their job security. Because of this, it is especially important for voters to truly understand what unemployment is, how fiscal policy can affect it, and how unemployment affects the nation’s gross domestic product, or GDP. A voter should be able to analyze unemployment separate from politics, and thus this paper will avoid divulging into specific politics and arguments. According to Roger LeRoy Miller, in the Economics Today textbook, unemployment is the number of adults that are able to work, are currently looking for a job, but have not yet found one. There are four main types of unemployment: frictional, structural, cyclical, and seasonal. Frictional unemployment is where the …show more content…

In this essay, the author

  • Opines that voters should understand unemployment, fiscal policy, and how it affects the nation's gdp.
  • Explains the four main types of unemployment: frictional, structural, cyclical, and seasonal.
  • Explains that cyclical unemployment occurs when there is a decrease in aggregate demand, causing businesses to fall into recession.
  • Explains that table 1 displays unemployment rates from 2008 to 2015, along with employment rates specifically pertaining to those with an education, or lack thereof.
  • Explains that unemployment rates drop as education rises, consistent even within the recession bubble. there hasn't been a year where less education had lower unemployment rate than higher education level.
  • Explains that fiscal policies are discretionary government spending or taxations made to achieve national economic goals, such as reducing the unemployment rate.
  • Explains that government spending positively affects the national gross domestic product, and it would be typically used to fix recessionary gaps.
  • Explains okun's law, which shows an inverse relationship between changes in unemployment rate and the gap between actual real gdp and potential gdp.
  • Explains that proper analysis of unemployment trends in various sectors can guide voters to decide which policies they would like to see enacted.

Authur Okun proposed this law in 1962, which shows an inverse relationship between changes in unemployment rate and the gap between actual real GDP and potential real GDP (Miller). The gap between actual real GDP and potential real GDP is how close we are to reaching our potential maximum output. This gap can be seen as our growth. As unemployment rates grow, the gap becomes smaller, implying that we are not able to grow as an economy with the current rates (Miller). Naturally, if unemployment rates start to decline, our potential to grow increases. Lower unemployment rates mean that there are more workers actively working within the labor force, meaning that more contributions are going to be potentially made to the real GDP. Okun’s law coincides with this

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