CAUSES OF UNEMPLOYMENT

We can categorize the causes of unemployment in the world's high-income countries in two ways: either the circular unemployment due to the economy, or the natural rate of unemployment due to factors in the labor markets, such as job-related Government regulations and starting a business.

Unemployment due to recession:

For unemployment caused by the recession, the Kenyan economic model points out that both fiscal and monetary policy tools are available. The formula for monetary policy to deal with the recession is straightforward: pursue an expanded monetary policy to increase the amount of money and loans, reduce interest rates, and increase aggregate demand. In a recession, there is usually a relatively small risk of inflation, and so does a central bank, which fights inflation as its top priority, usually at interest rates. Can justify the reduction.

In terms of fiscal policy, the automatic stabilizers we have discussed in government budget and fiscal policy should be allowed to operate, even if there are large budget deficits during the recession. There is little agreement that, in addition to automatic stabilization, recessionary governments should try to adopt a discretionary fiscal policy of raising taxes or increasing spending. In the case of a severe recession, the case for such a non-provocative expansionary fiscal policy is strong, but for a small recession, given the lack of time to implement fiscal policy, countries need to exercise prudent fiscal policy Should be used.

However, as a result of the recession, it has been emphasized that expansionary fiscal and monetary policies do not stop the recession, just as the reversal of the switch turns off the light. After the official end of the recession, and the return to positive growth, private sector firms believe that the economic climate is healthy enough to increase their workforce, before a few months. Or it could take up to two years.

Natural unemployment rate:

Unemployment rates in European countries are generally higher than in the United States. In 2006, before the Great Depression began, the unemployment rate in the United States was 4.6 percent, followed by France at 9 percent, Germany at 10.4 percent, and Sweden at 7.1 percent. We can call this pattern of higher unemployment rates in Europe generally the same as in the 1970s, the natural unemployment rate in European economies is higher because they have a lot of regulations that restrict firms. Discourage job loss and unemployment. Workers taking jobs.

In theory, dealing with the natural unemployment rate is straightforward but difficult in practice. for example, by passing rules on where businesses can run and ensuring that the workplace is safe. However, these well-intentioned laws can, in some cases, interfere so much that businesses decide to limit their services.

For example, a law that imposes high costs on a business that seeks to fire or fire employees would mean that the business should try to avoid hiring in the first place.once a company has at least 50 employees inside France, management must Create three workers' councils, introduce a profit-sharing system, and, if the company decides to lay off workers for economic reasons, present reorganization plans to the councils. This labor law would necessarily restrict employment. Is (or increases the natural unemployment rate).

Advanced labor markets:

Low-income and middle-income countries face employment problems that outweigh unemployment because it is perceived in high-income economies. In these economies, large numbers of workers provide much of their livelihood through farming, fishing, or hunting. They communicate and trade with others and can succeed in short-term or one-day jobs, sometimes receiving pay with food or shelter, sometimes with money. They are not "unemployed" in the sense that we use the term in the United States and Europe, but they are not employed in a permanent paid job.

The starting point of economic activity, as we welcome economics! , Workers who are not connected to the labor market are often unable to acquire much expertise. Because these workers are not "officially" employed, they are often not eligible for social benefits such as unemployment insurance or old age payments, even if such payments are available in their home country. One of the main objectives of the policy is to help these workers engage in the labor market and the economy. Recent research by development economists shows that in low-income countries.

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