Causes Of Unemployment And Its Effect On The Economy

This article is related to macroeconomic which examines how the economy functions and its performance. Unemployment as a whole is related to macroeconomics. There are many reasons as to why a person could be unemployed. He or she could be retrenched, fired or still be looking for a job. However, if

In any economy, no matter whether it is controlled by the government or by free markets, people need to work in order to support it. The government does not generate tax revenue by magic. There have to be people in that economy earning an income to ensure that the government continues to collect taxes. In a free market economy, the same applies because there are some services which only an organized government can supply (such as protection from extra-national threats), but there also those which the people get for themselves because of the working of the markets. In any scenario, unemployment is, at the very least, a drag on the economy, and it can be much worse. This paper examines how the unemployment rate in the United States is underreported, and how that fact effects the sluggishness of the present economy.

A condition that has existed since the beginning of commercialization, unemployment has been in our history since its monumental recognition in 1929. The Great Depression is really when unemployment became a real issue and its highest peaks where between 1932 and early 1933 when the average rate of unemployment was 24.9%. Fast forward almost 80 years and unemployment is still a political issue whose rate has experienced a roller-coaster ride of highs and lows. Unemployment has many forms, but it is technological unemployment, that is a crisis which if declined will lead to an excellent and a benevolent rise to our nation’s economy.

What really causes unemployment? Is it because of people being lazy or college kids are just getting into the real world and cannot seem to get a job. Many people struggle to find jobs to provide for their families. Jodi Beggs (2014) in her blog discuss voluntary, involuntary, frictional, and cyclical unemployment. There is always an cause and effect that tend to happen within life. Some people may be laid off which causes them to be unemployed. Unemployment leads to poverty within American because people do not have to funds to servicf.

The failure of many businesses and cut backs in spending as a result of the great depression lead to wide spread layoffs and unemployment. Unfortunately the belief of many government officials at the time was that there was little good federal aid for the unemployed could do to repair the

These major flaws in the past economic theories lead to the new ideas. Economist John Keynes explained that classical economics stated that wages and prices are very flexible; when in actuality they weren’t as flexible as previously assumed. Keynes argued that the market is self-adjusting, however it has a long time before it actually made its way back on the rise. “In the long run we are all dead” was quoted from Keynes. Keynes believed that it was the aggregate demand for goods in the economy that determined the level of employment and the level of output.

With there being a variety of labels for unemployment I believe that frictional unemployment best describes what the U.S. is experiencing. Frictional unemployment is can be viewed as more of a desirable state of unemployment because it was chosen by the person themselves. Frictional unemployment typically doesn’t last for long periods of time, but instead a short period of time. The individuals that fall under this type of employment are normally waiting for accept a job soon or they could be searching for a job. It may not sound like the best decision to make, but it has been found that most individuals move to better positions. This type of employment benefits both the employee and the employer because the employer has a qualified worker

When governments look at policies to reduce unemployment, they tend to look at the short term and then the long term. In the short term, they need to ensure there is sufficient demand and economic growth in the economy to help control cyclical unemployment. This is done by adopting

around the globe, explanations of this phenomenom are plenty. How does unemployment serve a purpose, or is it just another chance for the powerful to stamp on those with less power? The

John Maynard Keynes was questioning the theories of the original economists and trying to understand why the Great Depression occurred; he proposed that there needs to be money spent in order to make our economy stay strong, as opposed to the “classical theory” which stated that proper wages are what makes the economy strong. His theory was that when a depression occurs, if consumers spent money, instead of saving it, the economy would be stimulated and drag itself out of the depression.

The great depression in the 1930’s devastated the economic market, but also produced two of the greatest economists to ever live, John Maynard Keynes and Friedrich August Hayek. Why did the economist John Maynard Keynes advocate for the government to have an active role with influencing the level of economic activity. This is because Keynes believes that this will stimulate the economic activity and bring the country out of economic drought. Keynes’ theory leads to the government influencing the level of aggregate demand, and how it effects inflation and output. Although Keynes was known as the greatest economist of this era, there was another economist by the name of Friedrich Hayek, whose beliefs were completely opposite to those of Keynes. Hayek wanted no government intervention and for the markets to control themselves.

     New explanations and fresh policies were urgently required; this was precisely what Keynes supplied. In his enduring work The General Theory of Employment, Interest, and Money, the central message translates into two powerful propositions. Existing explanations of unemployment he declared to be nonsense: Neither high prices nor high wages could explain persistent depression and mass unemployment. Instead, he proposed an alternative explanation of these phenomena focused on what he termed aggregate demand—that is, the total

The issue of unemployment has been a long fought battle. The lack of economic growth contributed to the major impact on the overall global employment predicament. According to studies an estimated 202 million workers were without jobs in the year of 2013. The year before was measured at 197 million, 2013 marked a 5 million increase of unemployment. This is a reflection of insufficient employment expansion that is unable to accommodate the growing labor force.

According to economists, employment and unemployment results when the supply and demand for human resources or labour is out of balance. Supply and demand are influenced by a range of forces that are the result of the interaction of economic, structural and policy factors.

There are many reasons for unemployment in the United States and around the world. Some of these causes are created by the individual and others are out of their control. No matter what the cause for unemployment, it has a devastating effect on the individual, family, and economy.