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Introduction
Unemployment is the presence of people in the country, forming part of the economically active population who are able and willing to work for hire, but can not find work.
According to the International Labour Organization, people aged 10-72 years as unemployed if the critical week survey on employment it simultaneously:
- do not have a job
- looking for work
- ready to start working
The unemployment rate is a quantitative indicator that compares the unemployment rate for different population (for different countries or for different periods of the same country). The unemployment rate is calculated as the ratio of the number of unemployed to the total number of economically active population or the number of interest groups (unemployment among women, young people, rural population, etc.). Most often expressed in percent.
The History of Unemployment
In traditional societies, the wages were not paid for their work, as the funds were not used at all. People lived off the land, and the land belonged to everyone, or anyone. The division of labor was malooschutimym. When money was invented and began the construction of cities, people have become dependent on them, buying food from vendors instead of having to grow, gather or hunt for food on their own. Dependence on work as a source of money to buy food and shelter is the basis of unemployment.
Unemployment has become a phenomenon gradually enter into economic thought with the increasing industrialization and bureaucratization. The formation of this concept can be seen on the example of the UK, as there it was well documented. In the XVI century England made no distinction between vagrants and those who have no work, all officially called persistent beggars (Sturdy beggar) and treated as a person who should be punished and sent. Closure of the monasteries in the 1530s increased poverty, as the monasteries helped the poor. Furthermore, in Tudor times increased population and increased process enclosure. The unemployed had only two choices - starve or break the law. In 1535 a law was passed, providing for the creation of a system of public works to combat unemployment, financed by taxes on income and capital. Released next year to apply the law allowed vagabonds corporal punishment
Natural Rate of Unemployment
Natural rate of unemployment is the economic hypothesis that for the general economic equilibrium, existing at a given real wage, there is a partial employment, which is the result of lack of information, mobility barriers, demographic change and other consequences of imperfect markets. For these reasons, it is impossible to reduce the unemployment rate to zero, but only to reduce it to a label defined by imperfect markets. Thus have an impact on the level of unemployment in such a narrow time frame possible. Only help slow the impact of using the methods of regulatory or structural policy. For example:
- development of technologies that facilitate job search
- introduction of the minimum wage
- organization of Trade Unions
- introduction of the so -called effective salary exceeding the market
According to the theory of the natural unemployment Freedman specific to each economy in line with the macroeconomic equilibrium in which the expected rate of inflation is equal to its actual level. Attempt to describe the levels of inflation and unemployment is the Phillips Curve. However, there is a direct dependency in broad time frame between these values and Friedman Phillips denied. According to them the rate of inflation is mainly dependent on the money supply, and the unemployment rate, in turn, tends to the level of natural unemployment.
Types of Unemployment
The are following types of unemployment:
Forced (unemployment expectations) - occurs when an employee is able and willing to work at a given wage, but can not find a job. The reason is the imbalance in the labor market due to the inflexibility of wages (due to laws on minimum wages, trade union work, raising wages to improve the quality of labor, etc.). When the real wage is above the level corresponding to the equilibrium of supply and demand, labor supply exceeds demand. Number of applicants for a limited number of jobs increases, and decreases the likelihood of real employment, which increases unemployment. Varieties of involuntary unemployment:
Cyclic - recurring recessions caused by production in the country or region. Represents the difference between the level of unemployment in the current economic cycle and the natural rate of unemployment. For different countries naturally recognized different levels of unemployment.
Seasonal - dependent on fluctuations in the level of economic activity during the year, for some specific industries.
Technological - unemployment associated with mechanization and automation of production, which resulted in the labor force becomes excessive, or needs a higher skill level.
Voluntary - linked to the reluctance of people to work, for example in reducing wages. Voluntary unemployment increases during economic boom and recession reduced by; its extent and duration vary in individuals of different occupations, skill levels, as well as in various socio- demographic groups. Also, in the economy, there is the concept of " unemployment trap " when the individual's earnings, regardless of whether it works or not, differ slightly (due to deprivation, when applying for a job, respectively. Compensation, ext. Payments, payments start substantial contributions insurance, etc)., which reduces a person's interest to top employment.
Block - due to changes in the structure of demand for labor, when formed structural mismatch between skills of the unemployed and demanding free workplaces. Structural unemployment is caused by a large-scale restructuring of the economy, changes in the structure of demand for consumer goods and production technologies, elimination of obsolete industries and occupations, and there are 2 types of structural unemployment: stimulating and destructive.
Institutional - unemployment arising in the case of state intervention or unions in setting the size of wage rates than those that could be generated in the natural market economy.
Unstable - called temporary reasons (for example, voluntary workers change jobs or dismissal in seasonal industries).
Friction - during voluntary employee search for a new job that suits him to a greater extent than the former workplace.
Marginal - unemployment poorly protected groups (youth, women, persons with disabilities) and the lower social strata.
Youth unemployment - among a group of persons aged 18-25.
Unemployment Insurance Risks
In the first case, the amount of insurance benefits comparable to the size of the salary of the insured person, and the period of payment depends on the duration of preceding employment. Second - the unemployed receive benefits, the size of which is comparable with the cost of living.
National systems of social support as the unemployed can combine both mechanisms (eg, Austria, Sweden, Belgium, Italy, Germany and France), and used only one of them (Greece and Portugal - insurance).
Insurance, a loss of employment, is required by law in most Western European countries. In Denmark, Sweden and Finland used voluntary optional insurance based on agreements between employers and unions.
Works Cited
Farmer, Roger E. A. (1999). "Unemployment". Macroeconomics (Second ed.). Cincinnati: South-Western. pp. 173–192. ISBN 0-324-12058-3.
Romer, David (2011). "Unemployment". Advanced Macroeconomics (Fourth ed.). New York: McGraw-Hill. pp. 456–512. ISBN 978-0-07-351137-5.
Simonazzi, A.; Vianello, F. (2001). "Financial Liberalization, the European Single Currency and the Problem of Unemployment". In Franzini, R.; Pizzuti, R. F. Globalization, Institutions and Social Cohesion. Heidelberg: Springer. ISBN 3-540-67741-0.
Summers, Lawrence H. (2008). "Unemployment". In David R. Henderson (ed.). Concise Encyclopedia of Economics (2nd ed.). Library of Economics and Liberty. ISBN 978-0865976658. OCLC 237794267.
