The Main Reason behind Unemployment - Assignment Example

The Main Reason behind Unemployment 1) The definition of unemployment states that unemployment exists when people willing and able to work cannot find jobs. However, since those people who are discourage or are not willing to work cannot be included as unemployed, their addition in the unemployment rate skews the data and unemployment is over-stated. 2) It is next to impossible to achieve zero percent unemployment. The main reason behind this is the fact that at any given time some people are unemployed because frictional unemployment or residual unemployment.

They may be searching for new job or cannot do job because they are handicapped. As a result of this, at any given time the rate of unemployment will always be greater than zero. 3) the most difficult type of unemployment to control is cyclical unemployment. This type of unemployment occurs due to decreasing demand in the economy. Hence, a government needs to take various difficult measures and have to implement reforms to improve the situation. 4) Unemployment haunts the society at individual and business level.

The major cost of unemployment to the society is decreased production of goods and services and less income for people. As a result of this GDP falls and balance of payment deteriorates. These problems are enhanced and a very complex spiral is created which is very dangerous for society as a whole. 5) The main advantage of limiting the entry of young individuals in the labor market is to administer the supply of labor in the market. This will help to keep the wages of older workers high in labor market and by limiting the supply of young people, indirectly demand for people in the current workforce will increase and unemployment will fall indirectly. 6) This will have negative impact on the local population and the current labor market.

Their entry is going to increase the supply of labor in the market and thus putting downward pressure on wages of labor currently employed. Many firms are going to hire the cheaper labor and make their present labor redundant, thus creating unemployment and lower labor wages in the market. 7) 108/107 * 100 = 105.88 The rate of inflation between these two years was around 5.88%. 8) Since both countries are experiencing deflation, no one is going to benefit from it. The money value of both countries will fall and thus there will be no change in international competitiveness in either of these countries and they will remain at par.

Thus, no one is going to benefit from it. 9) The statement cannot be completely affirmed or rejected without looking at other factors. Tokyo may be experiencing deflation but it will still be an expensive place to live in if the wages in Tokyo are low. It will also be expensive for foreigner if their currency is weaker than Yen, even if Tokyo is facing deflation. 10) When CPI is rising, people will find it difficult to work in present wages and will ask for wage increase, this is going to increase the cost of labor and COLAs.