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Unemployment is a major economic problem in many countries. Unemployment applies to the percentage of people who are able to work at the current society's pay rates but have yet to find work. A high rate of unemployment in a country can cause economic and social problems in the society. Unemployment will limit a country's long-term growth prospects. People are unemployed for a variety of reasons. According to economists, there are four forms of unemployment. There should be workable options that will help to reduce unemployment rates. The four types of unemployment, which the economists present, include cyclical, structural, seasonal, and frictional. Cyclical unemployment results from the severe economic period (Arnold 127). In this case, an individual has excellent skills in their work, and the economy needs the services, but there are difficult economic times. For instance, an autoworker loses his/her job since there is a reduction in the number of sales in a car selling company. Frictional unemployment is a case where persons are in search of an ideal job. An individual becomes frictionally unemployed if they are laid off or not being good at their job or if one quits their current job and they are looking for another one that they highly prefer. One can also be in this state if they are searching for their initial employment. Structural unemployment results from a mismatch between the skills that one possesses and the available employment opportunities (Arnold et al. 127). One becomes structurally unemployed if his/her skills are not of great value in an economy. Such may occur when machines take over people_x0092_s jobs. Seasonal unemployment refers to the availability of employment in particular times of a year. A clear case is a construction and agriculture jobs.
Full employment is a case where each with the capability and who has the willingness to work with the current wages in employed. In simple terms, it is where involuntary unemployment does not exist. Every nation around the globe has an aim of achieving a full employment equilibrium level where its existing resources are efficiently and being utilized fully since it results in a maximum output level. It is difficult for full employment to exist (Murray). For instance, there is a higher possibility of some people who are mentally and physically fit they are not willing to engage in any productive work.
Natural Rate of Unemployment
It refers to the unemployment rate when there is an equilibrium in the labor market. Unemployment arises due to the structural factors like the mismatched skills. The rate denotes a difference between persons willing to work with the current wage rate and those with the ability and will to work. The natural rate of unemployment includes both the structural and frictional unemployment. According to Skousen (233), the number of persons who are temporarily jobless and looking for employment opportunities denotes the natural rate of unemployment. Different institutional factors determine the natural rate of unemployment. The factors include education and skills; the level of labor mobility; the level of benefits; availability of information about a job; and labor market flexibility.
Impact of Unemployment on the Economy
Unemployment can adversely affect the economy since the productivity goes below the average level. A high unemployment rate in a state, makes its government include a burden of extra borrowing because of the production decrease there is a decrease in the consumption available services and goods. The unemployed persons would prefer to save than to spend and this extends to their family thus adversely affecting the economy. An increase in the unemployment rates significantly affects other economic factors like poverty, the standard of living, health costs, income per persons, and the healthcare quality (Junankar 111).
Solutions to Lowering Unemployment
The conventional measures to lower all the types of unemployment include creating new jobs through the stimulation of large and small businesses and establishing the labor exchanges and different employment services. There should be an identification of the factors determining the demand and supply of the labor in each type of unemployment. For example, in dealing with frictional unemployment, there should be the establishment of special services and improvement of the labor-market information supply system. There needs to be a transformation of mechanism that is complex such as the provision of retraining and training opportunities for the unemployed and employing protectionist ensure with the aim of protecting the domestic market. A nation can minimize cyclical unemployment by implementing the stabilization policy with the goal of preventing mass unemployment, severe recessions of production and creating new job opportunities in the public sector.
Unemployment is a severe economic challenge that affects the economic growth of a nation. The different types of unemployment include structural, cyclical, seasonal and frictional unemployment. The measures, which can help lower unemployment rates, include the provision of training opportunities to improve the skills needs for a particular job.
Arnold, Roger A. Economics. Australia: South-Western Cengage Learning, 2010. Print.
Junankar, P N. The Economics of Unemployment: Vol. 4. Cheltenham: Elgar, 2000. Print.
Murray, Michael J, and Mathew Forstater. The Job Guarantee: Toward True Full Employment. , 2013. Print.
Skousen, Mark. Economic Logic.. Washington, D.C.: Capital Press, 2014. Internet resource.
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