Unemployment2

Unemployment2

Contents:

1. I.   Definition of unemployment

1. II.   Causes of unemployment

1. III.   Types of unemployment

1. IV.   Cost of unemployment

1. V.   Measures to reduce unemployment

1. VI.   Conclusion

1. VII.   References:

Definition of unemployment:

Unemployment refers to the number of people who are jobless in an economy; unemployment is measured in terms of unemployment rate which is derived from the number of people who are unemployed divided by the total labor force. Unemployment has been a concern to governments as they apply policies that aid in reducing unemployment.

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Unemployment means a condition in which an economy has idle resources that are not being utilized, labor is a factor of production and if a country does not utilize this labor to the fullest then we have unemployment of labor which is a factor of production.

Unemployment however can be termed as a state in which an individual is looking for a job but not getting one, however unemployment does not include students, retired people or even children. There are three types of unemployment namely cyclical unemployment, frictional and structural unemployment, there are two types of frictional unemployment and this include seasonal unemployment and wait unemployment.

Measurement of unemployment:

Types of unemployment:

– Cyclical unemployment:

This type of unemployment exist where we have inadequate aggregate demand, its name is derived for varying business cycles, business cycles refers to varying of aggregate demand which when aggregate demand falls this discourages investments leading to unemployment, this business cycles are brought about by high tax levels, under consumption, low government spending and a decline in exports. Therefore this type of unemployment will result due to low aggregate demand which will cause a decline in investment leading to lower employment levels.

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– Frictional unemployment:

This type of unemployment results from people who are between jobs or temporarily looking for new ones, this type of unemployment is usually seen as voluntary unemployment because people search for new jobs, however this type of unemployment allows workers to get the best jobs that meet their wants and skills.

There are two types of frictional unemployment and they include the wait unemployment and seasonal unemployment:

1. Wait unemployment:

This is one type of frictional unemployment whereby workers will wait to achieve the few high paying jobs in an economy, this results to what is termed as wait unemployment.

2. Seasonal unemployment:

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This type of frictional unemployment is as a result of seasonal occupations that results from seasons, some enterprises provide jobs only during certain seasons and when the season is over they cause unemployment which is termed as seasonal unemployment.

– Structural unemployment

Structural Unemployment results from the changes in the economy, this type of unemployment results from changes in the economic structure of an economy making a mismatch between the job and the job seekers a good example is the advancement in technology lendering current workers to be unemployed because they lack necessary skills for the job. The introduction of modern technology such as computers will result to unemployment of old employees who may be computer illiterate.

– Disguised unemployment:

Thios is another type of unemployment whereby it can be termed as under unemployment, it involves employment that does not the equilibrium wage rate, example a person who spends the whole day herding only one sheep yet he can manage to take care of a hundred goats, this is termed as disguised unemployment.

Causes of unemployment:

– Cyclical unemployment:

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Cyclical unemployment is caused by business cycles which result from reduced aggregate demand; the reduction in aggregate demand will discourage investment leading to unemployment.

– Frictional unemployment:

This type of unemployment is caused by people who are in between jobs or are looking for better jobs. Seasonal unemployment is caused by changes in seasons while wait unemployment is caused by the few available high paying jobs.

– Structural unemployment:

This typoe of unemployment is caused by changes in the structural forms of an economy where by the current employees will lack the necessary skills for job resulting to unemployment.

– Disguised unemployment:

This type of unemployment is caused by underemployment whereby the person is employed but under employed, it is caused by lack of resources to produce and poverty.

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Cost of unemployment:

Measures to reduce unemployment:

– Cyclical unemployment:

According to the Keynesian theory this type of unemployment can be solved through stimulation of aggregade demand whereby this can be done through increased government spending or an expansionary monetary policy.

– Frictional unemployment:

This type of unemployment cannot be solved through stimulation of aggregate demand as in the case of cyclical unemployment, this type of unemployment can be solved through the provision of more and better information to employers and the employees about a particular job.

– Structural unemployment:

This type of unemployment results from the structural changes in the economy, this type of unemployment therefore can be resolved through the retraining of workers for their present jobs.

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– Disguised unemployment:

This type of unemployment can be reduced through government and monetary policies, because it results from poverty strategy that help erradicte poverty will play a major role in reducing this type of unemployment.