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Discussing The Issue Of Unemployment Economics Essay

Define Unemployment. Unemployment is the situati0n where an adult pers0n seeks a j0b but is unable to find one at current wage rate. The level of unemployment at any time is measured by government statistics. If the flow of workers through unemployment is constant then the size of the unemployment labor force will also be constant.

Explain why TWO sectors of the economy are growing faster than other sectors.

A country s economy can be divided into various sectors to define proportion of the population engaged in the activity sectors.

This segmentation starts from the continuum of distance from the environment. the first sector with the utilization of raw materials from the earth such as agriculture and mining it is called primary sector. And also packaging and processing of raw material associated with this sector is included in it.

It is seen now a days that a few percentage of people are linked with the primary sector. For example about 3% of labor force is now involved with this sector. However in early nineteenth majority of people are associated with primary sector. So this sector of economy is lacking behind.

The secondary sector related with manufacturing goods. All of manufacturing, processing and construction lie within the secondary sector. And activities associated are automobile, textiles, shipbuilding, chemical and engineering industries, aerospace manufacturing, metal working and smelting. These all areas are flourishing now days because people are more educated and keen to do different things.

The tertiary sector of economy is service industry. This sector delivers services to the general population and to businesses. Activities linked with this sector are banking, entertainment, movies, television, radio, restaurants, services, media, tourism, insurance, healthcare and law. This sector of economy is the leading in this era of modern world. And about in every part of world most people are linked with this sector. So it is flourishing like fire and leaving behind all other sectors of economy. It is seen in a report of U.S that more than 80% of the labor force is tertiary workers.

And the quarterly sector consists of intellectual people. And this sector include activates government, culture, libraries, Scientifics, research, education and IT. This sector of economy is growing but with the passage of time.

In a nutshell, the two sectors which are growing faster than other sectors are secondary and tertiary sectors. Because people are now more educated and skilled. (www.geograrheconomics.com)

Task 02

Using economic theory:

Explain how economists define ‘full employment’.

Full employment is a condition of national economy, where all or nearly all persons willing and able to work at the prevailing wages and working conditions are able to do so.

According to Lord William Beverage, Full employment is a condition where the number of unemployed workers is equaled the number of job vacancies available.

According to labor economists full employment is the attainment of the ideal unemployment rate where the types of unemployment that reflect labor market inefficiency such as structural unemployment do not exist. Only some frictional unemployment exit.

Explain THREE different ways in which Full Employment can ouccr and identify any disadvantages of each.

Ways of achieving full employment level

Full employment level can be achieved in the following ways:

High capital turnover: capital turn over means the ratio of annual sales to invested capital. A measure of capital turnover indicates that how effectively investment capital is used to produce revenues. A high capital turnover ratio indicates that the company is using its

capital well, while the low ratio indicates the opposite. It is also called equity turnover. So to achieve full employment level capital turnover should be high.

Job guaranteed program: Another way of achieving full employment level is the job guaranteed program. where those who are unable to find work in the private sector are employed by the government, the stock of thus employed public sector fulfilling the same function as unemployed do in controlling the inflation without human costs of unemployment.

Promoting foreign investment: Full employment level can be achieved by promoting foreign investment by keeping the interest rate low so that foreign investor will come and make investment in the different areas of your economy. In this way employment can be boosted up and we are in the way to achieve full employment level.

Disadvantages:

High capital turn over may be become the cause of destabilizing the economy. When u imports new and latest machinery, the old workers may find difficulty in operating these equipments. Because of high capital turnover few sectors of the economy may be developed where the profit margin is high while the other sectors of the economy may be ignored where the profit margin is certain low. So because of this the achievement  of balanced growth of an economy become difficult.

One of the main disadvantages of job guaranteed program is that people become relax because they do not have any fear of losing the job and because of this they d0 not contribute at their optimum level towards the development of a country. Because of this policy people s do not feel any competition among them and the level of encouragement is also low.

The main disadvantage of foreignment investment is that your local industry may be affected badly and it’s become very difficult for the local producer to survive in this competitive environment.

Task 03

Write a section in your report explaining the benefits of increasing the rate of unemployment benefit for:

The unemployed

The benefit rate depends on the amount of earning when someone is employed. In my point of view, these benefits help to improve the standard of living of unemployed. On the other hand, If person is unemployed from last six months or more than and if he has no penny to consume then he must fell into some crime for food, medicine and other essential needs. And it is not the free money. It is something you had already paid from your previous jobs and it simply give back to you when you should lose your job. However it has a negative aspect. These benefits may eradicate poverty. This may make unemployed lazy person which rely all time on benefits and not wanted to work more. This thing is bad for both that unemployed and the economy of country.

Society

If a significant portion of the population is unemployed then these benefits helps prevent a recession by giving people money so they can spend it and help economy to go. This also prevents people to become a beggar. But it has more negative aspects than positive. If the people who are receiving benefits hoard the money in spit of spending this hurts the economy and it is called as leakage.

It gives people incentive to stay unemployed. When the other people saw that this person is taking money without working so why should I? It means it encourages other people to get rid of working and apply for benefits. IT also put barriers to movement of labor. If people cannot find a job in one part of country they would move to other parts of country to looks for jobs. But if people will stay on that the same place and get benefits then they didn’t move. This is worse thing for economy because other parts may have a lot of jobs but no labor to employ. It may lead to high unemployment rate. This situation enforces government to raise the taxes. This lead to inflation in the country and the middle class also affected by these conditions. They might not cover all the expenses and apply for benefits as well. So the whole economy of the country suffers.

Task 04

Explain whether the government should tackle the causes or the symptoms of unemployment.

Government should tackle the causes or symptoms of unemployment in the following ways.

1) By rapid industrial growth:

Another solution of the problem of the unemployment lies on the rapid expansion of industry. It is the industry which can provide not only jobs but also higher income to remove poverty from the country.

2) By increase in capital formation:

Capital accumulation means rapid economic development . In order to increase capital accumulation saving should be encouraged. Banks can play important in saving money for capital formation by introducing different saving schemes

3) By population control:

This is the most important way to reduce unemployment . When the growth of population will slow down, the number of job seekers will be lower to match the availability.

4) By giving technical training to the people:

Another way to remove unemployment is to give the people technical training. There should be more emphasis on impartial technical training and skills to the people. In the future development of our economy, only skilled person have scope for employment.

5) By encouraging self employment:

Through various industries and financial schemes, self employment should be encouraged in the form of small business, workshops, clinic etc.

6) Change in social attitude:

Through education, people s attitude towards work and job needs to be changed. They should be thought not to hesitate to work in factories. Manual labor should be given due respect so that young people willing to adapt it.

7) Government policy:

The government through various policies and steps has always encouraged generation of employment opportunities. By concentrating on small projects these programs create large number of jobs. 

8) By promoting small scale industries:

Since small scale industries are more labor intensive , so in industrial policy, development of such industries should be encouraged and small scale business men should be financed.

Explain the causes of THREE different types of unemployment.

Causes of unemployment:

1) Frictional unemployment:

It is caused by economic frictions in trade and industry .

Bottlenecks in supply of raw materials, fuel or other goods needed in production .Labour are temporarily laid off until the required inputs are made available.

Time is needed by workers looking for jobs and employers looking for workers (examples include leavers seeking for jobs, people who are fired). This type of unemployment is normal and temporary in nature. It is usually about 1 to 2 percent and economies with such existing unemployment are still considered to be in full employment.

2) Structural unemployment:

This type of unemployment result from change in the structure of the economic activities of the country. The main causes are as follows:

change in demand:

if there were to be a decrease in the demand for a product due to change in people s taste or cheaper imports available and if this change were to be permanent ,the supply of such a product must be reduced. Fewer workers then are required. Retrenched workers may not be readily absorbed into, other industries and thus become unemployed.

Change in supply:

On the other hand ,even if demand conditions were to remain for a particular product ,the supply of it may not be forthcoming due to depletion of raw material required.

In other words structural unemployment results from a mismatch between the demand for labor and the ability of the workers. It does not affect the particular industry that has adverse repercussions on related industries as well.

3) Disguised unemployment:

This is due to negligible or nil marginal revenue product of a worker. If that worker is removed, a company can still achieve its goal.

Discuss a policy measure for each of these THREE different types of unemployment.

1) Frictional unemployment can be removed by creating awareness in the people about job opportunities and by making information cell houses in the rural areas of the country.

2) Structural unemployment can be removed by making the economy more stable through consideration of demand and supply forces in the economy.

3) Disguised unemployment can be removed by adjusting their employee whose marginal productivity is zero in one department in another department where their marginal productivity is certainly high.

Task 05

Write on the supply side economics?

An explanation of supply side economics.

“An economic theory which holds that reducing tax rates, especially for businesses and wealthy individuals, stimulates savings and investment for the benefit of everyone. Also called trickle-down economics”. www.investwords.com

Supply side economics relates with macroeconomics. It emphasizes on the tax cut policy from the manufacturers this will encourage them to produce more goods and services. It mean more products more choice for consumers. Supply side economics also suggests for lowering income taxes from consumer. As income taxes are short consumer have more money in their pockets. They think that economy of country is good so they spend more money on buying products.

The remedies that supply side economist put forward to reduce unemployment.

Supply side economic policies suggest government to improve productivity and efficiency in the economy. Remedies that supply side economists put forward to reduce unemployment are:

They suggest giving better job information to help reduce frictional unemployment. Government should minimize unemployment benefits which increase incentive to get a job. It is realty that unemployment benefits create an unemployment trap, for those who are on benefits, but now want to work they would not get any extra income after tax.

Other suggestion economists gave is to reduce power of trade unions because these unions can cause real wage unemployment. If government reduces the power of trade unions then wage rate fall to equilibrium point which reduce unemployment and helps to increase market labor flexibility.

Evidence of governments who have used supply side measures to reduce unemployment and a discussion of what effects those measures have had.

UK (United Kingdom) has used many supply side policies to reduce unemployment. UK government found the policies that are useful include:

They reduced the unemployment benefits and increase the wage rate which makes benefits less attractive. And more people want to work.

They reduced powers of trade unions. Now trade unions are less powerful in UK than in 70’s and so this helps in reducing real wage unemployment.

A big achievement is to give better information and training for unemployment helps workers to accept job if offered after six months.

Task 06

Write a report on the unemployment.

UNEMPLOYMENT

Definition of Unemployment

Sectors of Economy

Full Employment

Unemployment Benefits

Types of Unemployment and Policy Measures

Supply Side Economics and Remedies

Unemployment is the situati0n where an adult pers0n seeks a j0b but is unable to find one at current wage rate. The level of unemployment at any time is measured by government statistics. If the flow of workers through unemployment is constant then the size of the unemployment labor force will also be constant.

A country s economy can be divided into various sectors to define proportion of the population engaged in the activity sectors.

This segmentation starts from the continuum of distance from the environment. the first sector with the utilization of raw materials from the earth such as agriculture and mining it is called primary sector. And also packaging and processing of raw material associated with this sector is included in it.

It is seen now a days that a few percentage of people are linked with the primary sector. For example about 3% of labor force is now involved with this sector. However in early nineteenth majority of people are associated with primary sector. So this sector of economy is lacking behind.

The secondary sector related with manufacturing goods. All of manufacturing, processing and construction lie within the secondary sector. And activities associated are automobile, textiles, shipbuilding, chemical and engineering industries, aerospace manufacturing, metal working and smelting. These all areas are flourishing now days because people are more educated and keen to do different things.

The tertiary sector of economy is service industry. This sector delivers services to the general population and to businesses. Activities linked with this sector are banking, entertainment, movies, television, radio, restaurants, services, media, tourism, insurance, healthcare and law. This sector of economy is the leading in this era of modern world. And about in every part of world most people are linked with this sector. So it is flourishing like fire and leaving behind all other sectors of economy. It is seen in a report of U.S that more than 80% of the labor force is tertiary workers.

And the quarterly sector consists of intellectual people. And this sector include activates government, culture, libraries, Scientifics, research, education and IT. This sector of economy is growing but with the passage of time.

In a nutshell, the two sectors which are growing faster than other sectors are secondary and tertiary sectors. Because people are now more educated and skilled.

Full employment is a condition of national economy, where all or nearly all persons willing and able to work at the prevailing wages and working conditions are able to do so.

According to Lord William Beverage, Full employment is a condition where the number of unemployed workers is equaled the number of job vacancies available.

According to labor economists full employment is the attainment of the ideal unemployment rate where the types of unemployment that reflect labor market inefficiency such as structural unemployment do not exist. Only some frictional unemployment exit.

Ways of achieving full employment level

Full employment level can be achieved in the following ways:

High capital turnover: capital turn over means the ratio of annual sales to invested capital. A measure of capital turnover indicates that how effectively investment capital is used to produce revenues. A high capital turnover ratio indicates that the company is using its

capital well, while the low ratio indicates the opposite. It is also called equity turnover. So to achieve full employment level capital turnover should be high.

Job guaranteed program: Another way of achieving full employment level is the job guaranteed program. where those who are unable to find work in the private sector are employed by the government, the stock of thus employed public sector fulfilling the same function as unemployed do in controlling the inflation without human costs of unemployment.

Promoting foreign investment: Full employment level can be achieved by promoting foreign investment by keeping the interest rate low so that foreign investor will come and make investment in the different areas of your economy. In this way employment can be boosted up and we are in the way to achieve full employment level.

Disadvantages:

High capital turn over may be become the cause of destabilizing the economy. When u imports new and latest machinery, the old workers may find difficulty in operating these equipments. Because of high capital turnover few sectors of the economy may be developed where the profit margin is high while the other sectors of the economy may be ignored where the profit margin is certain low. So because of this the achievement  of balanced growth of an economy become difficult.

One of the main disadvantages of job guaranteed program is that people become relax because they do not have any fear of losing the job and because of this they d0 not contribute at their optimum level towards the development of a country. Because of this policy people s do not feel any competition among them and the level of encouragement is also low.

The main disadvantage of foreignment investment is that your local industry may be affected badly and it’s become very difficult for the local producer to survive in this competitive environment.

The unemployed

The benefit rate depends on the amount of earning when someone is employed. In my point of view, these benefits help to improve the standard of living of unemployed. On the other hand, If person is unemployed from last six months or more than and if he has no penny to consume then he must fell into some crime for food, medicine and other essential needs. And it is not the free money. It is something you had already paid from your previous jobs and it simply give back to you when you should lose your job. However it has a negative aspect. These benefits may eradicate poverty. This may make unemployed lazy person which rely all time on benefits and not wanted to work more. This thing is bad for both that unemployed and the economy of country.

Society

If a significant portion of the population is unemployed then these benefits helps prevent a recession by giving people money so they can spend it and help economy to go. This also prevents people to become a beggar. But it has more negative aspects than positive. If the people who are receiving benefits hoard the money in spit of spending this hurts the economy and it is called as leakage.

It gives people incentive to stay unemployed. When the other people saw that this person is taking money without working so why should I? It means it encourages other people to get rid of working and apply for benefits. IT also put barriers to movement of labor. If people cannot find a job in one part of country they would move to other parts of country to looks for jobs. But if people will stay on that the same place and get benefits then they didn’t move. This is worse thing for economy because other parts may have a lot of jobs but no labor to employ. It may lead to high unemployment rate. This situation enforces government to raise the taxes. This lead to inflation in the country and the middle class also affected by these conditions. They might not cover all the expenses and apply for benefits as well. So the whole economy of the country suffers.

Government should tackle the causes or symptoms of unemployment in the following ways.

1) By rapid industrial growth:

Another solution of the problem of the unemployment lies on the rapid expansion of industry. It is the industry which can provide not only jobs but also higher income to remove poverty from the country.

2) By increase in capital formation:

Capital accumulation means rapid economic development . In order to increase capital accumulation saving should be encouraged. Banks can play important in saving money for capital formation by introducing different saving schemes

3) By population control:

This is the most important way to reduce unemployment . When the growth of population will slow down, the number of job seekers will be lower to match the availability.

4) By giving technical training to the people:

Another way to remove unemployment is to give the people technical training. There should be more emphasis on impartial technical training and skills to the people. In the future development of our economy, only skilled person have scope for employment.

5) By encouraging self employment:

Through various industries and financial schemes, self employment should be encouraged in the form of small business, workshops, clinic etc.

6) Change in social attitude:

Through education, people s attitude towards work and job needs to be changed. They should be thought not to hesitate to work in factories. Manual labor should be given due respect so that young people willing to adapt it.

7) Government policy:

The government through various policies and steps has always encouraged generation of employment opportunities. By concentrating on small projects these programs create large number of jobs. 

8) By promoting small scale industries:

Since small scale industries are more labor intensive , so in industrial policy, development of such industries should be encouraged and small scale business men should be financed.

Causes of unemployment:

1) Frictional unemployment:

It is caused by economic frictions in trade and industry .

Bottlenecks in supply of raw materials, fuel or other goods needed in production .Labour are temporarily laid off until the required inputs are made available.

Time is needed by workers looking for jobs and employers looking for workers (examples include leavers seeking for jobs, people who are fired). This type of unemployment is normal and temporary in nature. It is usually about 1 to 2 percent and economies with such existing unemployment are still considered to be in full employment.

2) Structural unemployment:

This type of unemployment result from change in the structure of the economic activities of the country. The main causes are as follows:

change in demand:

if there were to be a decrease in the demand for a product due to change in people s taste or cheaper imports available and if this change were to be permanent ,the supply of such a product must be reduced. Fewer workers then are required. Retrenched workers may not be readily absorbed into, other industries and thus become unemployed.

Change in supply:

On the other hand ,even if demand conditions were to remain for a particular product ,the supply of it may not be forthcoming due to depletion of raw material required.

In other words structural unemployment results from a mismatch between the demand for labor and the ability of the workers. It does not affect the particular industry that has adverse repercussions on related industries as well.

3) Disguised unemployment:

This is due to negligible or nil marginal revenue product of a worker. If that worker is removed, a company can still achieve its goal.

1) Frictional unemployment can be removed by creating awareness in the people about job opportunities and by making information cell houses in the rural areas of the country.

2) Structural unemployment can be removed by making the economy more stable through consideration of demand and supply forces in the economy.

3) Disguised unemployment can be removed by adjusting their employee whose marginal productivity is zero in one department in another department where their marginal productivity is certainly high.

“An economic theory which holds that reducing tax rates, especially for businesses and wealthy individuals, stimulates savings and investment for the benefit of everyone. Also called trickle-down economics”.

Supply side economics relates with macroeconomics. It emphasizes on the tax cut policy from the manufacturers this will encourage them to produce more goods and services. It mean more products more choice for consumers. Supply side economics also suggests for lowering income taxes from consumer. As income taxes are short consumer have more money in their pockets. They think that economy of country is good so they spend more money on buying products.

Supply side economic policies suggest government to improve productivity and efficiency in the economy. Remedies that supply side economists put forward to reduce unemployment are:

They suggest giving better job information to help reduce frictional unemployment. Government should minimize unemployment benefits which increase incentive to get a job. It is realty that unemployment benefits create an unemployment trap, for those who are on benefits, but now want to work they would not get any extra income after tax.

Other suggestion economists gave is to reduce power of trade unions because these unions can cause real wage unemployment. If government reduces the power of trade unions then wage rate fall to equilibrium point which reduce unemployment and helps to increase market labor flexibility.

UK (United Kingdom) has used many supply side policies to reduce unemployment. UK government found the policies that are useful include:

They reduced the unemployment benefits and increase the wage rate which makes benefits less attractive. And more people want to work.

They reduced powers of trade unions. Now trade unions are less powerful in UK than in 70’s and so this helps in reducing real wage unemployment.

A big achievement is to give better information and training for unemployment helps workers to accept job if offered after six months.

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