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Hamza Abdul Jabbar Qureshi
Section Gr 1 14k-2116
Hamza Farukh Section Gr 1 14k2186
Muhammad Kumail Section Gr 1
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Muhammad Junaid Shakeel Section
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INTRODUCTION AND
CAUSES
UNEMPLOYMENT
Definition:
UNEMPLOYMENT
During periods of recession, an economy
usually experiences a relatively high
unemployment rate.
Calculation:
Unemployment rate is calculated as
percentage by dividing the no. of
unemployed individuals by total
individuals currently in the labor force
UNEMPLOYMENT
CONTROLLING OR REDUCING
UNEMPLOYMENT
Many societies have been able to have almost
full employment for a significant period of time.
UK in 1950's-60's had averaged 1.6%
unemployment.
Studies suggest that since 1970, attempts to
achieve full employment rather natural
unemployment will fail; resulting in less output
with more inflation.
TYPES OF
UNEMPLOYMENT
Types of Unemployment
UNEMPLOYMENT
2) SUPPLY-SIDE SOLUTIONS:
Disadvantage of demand-side is a minimum
wage law will increase the cost of
low-skilled
worker, resulting in his unemployment.
Make labor market more flexible by reducing
the minimum wage and reducing the power of
unions.
Supply side advocates believe that reducing
business taxes, decreasing labor's share of
national income, reducing regulations will
increase jobs.
UNEMPLOYMENT
1) DEMAND-SIDE SOLUTIONS:
If the demand for goods and services in
the economy increase, demand for
labor will increase, increasing
employment and wages.
One theory is to increase wages of
working class, so they spend more on
goods and services rather than saving.
UNEMPLOYMENT AND
OTHER
MACROECONOMICS
FACTORS
Spending power
The spending power of an
unemployed person and his family
decreases drastically and he prefers
to save rather than spend which in
turn affects the economy.
Recession
With the increase in unemployment
rate, other economy factors are
affected, such as: income per person,
health costs, quality of healthcare,
standard of living and poverty
Effects of unemployment
on society
Crime rate
Studies have shown that
unemployment often results in higher
crime rate. This makes sense
because people may turn to crime to
fulfill their needs.
Psychological effects
Unemployment can have an overall
effect on a person mental health.
Studies have shown that people
experiencing long periods of
unemployment might become
anxious or depressed, and may have
trouble sleeping
Employment gaps
The longer a person is unemployed,
the more difficult it becomes to find a
job. Employers find employment
gaps as negative aspect. No one
wants to hire a person who has been
out of work for sometime even when
there is no fault of the individual.
Loss of skills
The unemployed person is not able
to use his skills. And if he remain
unemployed for a long time, it may
result in loss of some skills.
MEASURING
UNEMPLOYMENT
Gathering Statistics
Labour Force Sample Surveys are the most preferred method of
unemployment rate calculation since they give the most
comprehensive results and enables calculation of unemployment by
different group categories such as race and gender.
Official Estimates are determined by a combination of information
from one or more of the other three methods. The use of this
method has been declining in favor of Labour Surveys.
Social Insurance Statistics such as unemployment benefits, are
computed base on the number of persons insured representing the
total labour force and the number of persons who are insured that
are collecting benefits. This method has been heavily criticized due
to the expiration of benefits before the person finds work.
Employment Office Statistics are the least effective being that
they only include a monthly tally of unemployed persons who enter
employment offices.
Unemployment Rate