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Types of unemployment
Let us approach the task of defining full employment by distinguishing among several different types of employment.
Frictional unemployment
Given freedom to choose occupations & jobs, at any point in time some workers will be "between jobs". Some workers will be in the process of volountarily switching jobs. Others will have been fired and are seeking reemployment. Still others will be temporarily laid off from their jobs cause of seasonality or modal changeovers as in aotomobile industry and there will be some workers particularly young people, searching for their first jobs. Economists use the term Frictional unemployment which consists of search unemployment and wait unemployment, for the group of workers whop are either searching for jobs or waiting to take jobs to the near future. The adjactive "frictional" implies that the labor market doesn't operate perfectly and instan-taneousely - that's without friction in matching workers & jobs. Frictional unemployment is regarded is inevitable and, at least inpart, desirable.
Structural unemployment
Frictional unemployment shades into a second category, called structural In this regard, economists use the term "structural" in the sense of "compisitional". Important changes occur overtime in the "structure" of consumer demand and in tecnology which alter the structure of the total demand for labour. Because of suchchanges some particular skills will be in less demand or may even become obsolete. The demand for other skills will be expending, including new skills which previously did not exist. Unemployment results because the composition of the labor force doesn't respond weekly or completely to the new structure of job opportunities. As a result some workers find that they have no readily marketable talents; Their skills and experience have been rendered obsolets and unwanted by changes in technology and consumer demand.
This paragraph summary.
1. Our economy has been characterized by fluctiations in national output, employment and the price level. Although characterized by common phases - peak, recession, trough, reco-very - business cycles vary greately in duration and intensity.
2. Although the business cycle has been explained in terms of such ultimate causal factors as innovations, political events, and money creation, it is generally agreed that the level of totel spending is the immediate determinant of national output and employment.
3. All sectors of the economy are affected by the business cycle but in varying ways and degrees. The cycle has greater output and employment remifications in the capitel goods and durable consumer goods industries than is does in nondurable goods industries. Over the cycle, price fluctuations are greater in competetive than in monomolistic industries.
4. Economsts distinguish between frictional, structural and cyclical unemployment. The full-employment or natural rate of unemployment is currently believed to be between 5 and 6%. The accurate measurement of unemployment is complicated by the existance of parttime and discouraged workers.
5. The economic cost of unemployment as measured by the GNP gap, consists of the goods & services which society foregoes when its resources are involountarily idle. Okun's law suggests that every one person increase in unemployment above the natural rate gives rise to a 2.5%
GNP gap.
Classical & Keynesian theories of employment
1. Classical employment theory envisonet laissez faire capitalism as being capable of providing virtually continous full employment. This analysys was based on Say's Law and the assumption of price-wage flexibility.
2. The classical economists argued that because supply creates its own demand, general overproduction was improbable. This conclusin was held to be valid even when saving occured, cause the money market or most specifically, the interest rate, would automatically synchronize the saving prans of households and the investment plans of businesses.
3. Classical employment theory also held that even if temporary declines in total spending where to occur, these declines would be compensated for by downdard price wage adjustments in such a way that real output, employment, and real income wouldn't decline.
4. Keyneisian employment theory rejects the notion that the interest rate would equate saving and investment by pointing out that savers & investors are substantially different groups who make their saving & investment decisions for different reasons - reasons which, for savers, are largely unralated to the interest rate. Further more, because of changes in
Реферат опубликован: 12/11/2009