Employment Question Hsc Type (1 Viewer)

[moey16]

An economy is experiencing economic growth and rising employment rates. Explain how it is possible for the unemployment rate to be rising at the same time. (3MRKS).

I got confused when reading this question anybody got some points about this question?

 

[Mr-X]

The unemployment rate could be rising at the same time because of structural changes. The structural changes will help economic growth, but will cause structural unemployment to occur since the skills held by the workers made redundant don't match the skills needed by the new industries.

 

[Demandred]

Think how unemployment is measured. If overall participation increases greater than employment growth (both are healthy traits) then unemployment would increase. So why would participation increase?

It is assumed (for the neo-classicalists at least) that all workers optimise between leisure and pay opportunity costs. If the economy is expanding, and labour demand is increasing, wages would tend to rise, increasing the opportunity cost of not going to work. Thus, they are more inclined to go to look for jobs. As participation increases greater than employment growth, unemployment increases.

 

[ilovecommunism]

回复: Re: Employment Question Hsc Type

in addition, no one is able to find a job immediately after re-entering the work force, and these people are classified as unemployed because they "are willing to find jobs, but unable to get themsleves employed at the moment".