Economics Unemployment as a Constructive Term Paper

  • Length: 5 pages
  • Sources: 3
  • Subject: Economics
  • Type: Term Paper
  • Paper: #53315348

Excerpt from Term Paper :

This negative motivation technique was mostly used in the 1930's, while nowadays it is rarely used.

Another advantage of unemployment is that it helps limiting an accelerated growth of the Gross Domestic Product (GDP) that cannot be supported for extremely long periods of time because of the resource constraints and environmental impacts also. If the employment rate is high, human resources are not used at their best capacity, which leads to wasting opportunities to produce goods and services, causing problems for the economy on a long-term.

Unemployment also encourages certain people to start their own business. Most of these people are former employees previously trapped in dead-end jobs with no future, that after being fired from their jobs found the courage and the motivation so start a business of their own. This way, many little companies are coming along quite nicely. These small companies create labor demand that is satisfied by unemployed workers, therefore diminishing the unemployment rate on a medium term.

Unemployment determines a better prepared labor supply. Inactive professional periods determine unemployed people to take certain classes to qualify for another job, unemployment providing them the time and motivation for taking classes to improve their professional skills. On a long-term, the labor market will enrich itself with highly trained professionals.

Unemployment may also be responsible for the migration of unemployed population to under populated areas, where the work supply is very low. This creates a balanced population distribution on a territory, influencing in a positive way the economic life of certain regions.

The natural functioning of the labor market can only be attained with natural unemployment, whose rate corresponds to full employment. Therefore, the rate of natural unemployment ensures macroeconomic balance.

Each unemployment type affects the economy in a different way and has a different impact. Cyclical unemployment appears when there is not enough aggregate demand for the labor. This causes professional reorientation. Workers found in this situation will change their professional profile by orienting towards other jobs for which the labor market is not saturated, therefore satisfying the labor demand in other professional areas.

Frictional unemployment involves people being temporarily between jobs. It is also referred to as search unemployment, since people involved in it are searching for a new job. In some situations is considered to be constructive, because it helps both workers to find the exact job that best fits their qualifications, skills, abilities and needs, and employers to find the best suitable candidates.

Marxian unemployment is when unemployment threat is used to determine employees to work hard and to have low wage expectance.

All in all, unemployment is generally a negative phenomenon that causes important problems for any economy, but a low level of unemployment may be considered constructive, as it presents certain advantages. A low rate of unemployment helps reduce or decelerate inflation, it encourages labor productivity and profitability. Another important positive aspect is that it helps limiting an accelerating growth of the Gross Domestic Product. If kept under control at a certain low level, unemployment can help a nation's economy and contribute to its health. In every healthy and balanced national economy unemployment exists, but it is kept at a low rate. Low unemployment rate also has certain advantages on a social level.

Reference List

Labor Force Statistics from the Current Population Survey (2006). U.S. Department of Labor. Bureau of Labor Statistics. Retrieved January 11, 2007 at http://www.bls.gov/cps/home.htm.

U.S.: Low Unemployment Raises an Old Inflation Debate (2006). Business Week online. Retrieved January 12, 2007 at http://www.businessweek.com/magazine/content/06_08/b3972038.htm.

Rebitzer, James B. Unemployment, Labor Relations, and Unit Labor Costs (1988). The American Economic Review. Vol. 78. No. 2. Retrieved January 11, 2007 at http://links.jstor.org/sici?sici=0002-8282%28198805%2978%3A2%3C389%3AULRAUL%3E2.0.CO%3B2-U&size=LARGE.

Labor Force Statistics from the Current Population Survey (2006). U.S. Department of Labor. Bureau of Labor Statistics. Retrieved January 11, 2007 at http://www.bls.gov/cps/home.htm.

U.S.: Low Unemployment Raises an Old Inflation Debate (2006). BusinessWeek online. Retrieved January 12, 2007 at http://www.businessweek.com/magazine/content/06_08/b3972038.htm.

Rebitzer, James B. Unemployment, Labor Relations, and Unit Labor Costs (1988). The American Economic Review. Vol. 78, No. 2. Retrieved January 11, 2007 at http://links.jstor.org/sici?sici=0002-8282%28198805%2978%3A2%3C389%3AULRAUL%3E2.0.CO%3B2-U&size=LARGE.

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