1. Measures to reduce unemployment
1.1. Expansionary fiscal policy / deficit budget policy
1.1.1. i)↓ direct taxes
1.1.1.1. Income tax ↓ , Yd ↑ , C↑ , AD ↑, P ↑
1.1.1.1.1. Firm will employ more workers
1.1.2. ii) ↓ indirect taxes
1.1.2.1. GST↓ , GPL ↓ ,C ↑ ,AD ↑ ,P ↑ employment rate ↑
1.1.3. iii) ↑ in government spending
1.1.3.1. Build up new schools,
1.1.3.1.1. Firm will employ more workers
1.1.4. iv) ↑ in operating expenditure
1.1.4.1. Government ↑ wages and salaries of government servant
1.1.4.1.1. money income ↑
1.2. Expansionary/tight/restrictive monetary policy
1.2.1. i) ↓ in liquidity ratio
1.2.1.1. Commercial bank have more excess reserve to be loaned out
1.2.1.1.1. MS ↑, C ↑, AD↑ , P ↑
1.2.2. ii)↓ in SRR @ RRR
1.2.2.1. Commercial bank have more excess reserve to be loaned out
1.2.2.1.1. MS ↑ , C ↑ , AD↑ , P ↑
1.2.3. ii)↓ in discount rate @ bank rate
1.2.3.1. Cost of borrowing will be less expensive
1.2.3.1.1. Commercial bank will demand for more loan & have more excess reserve to be loaned out
1.2.4. iv) Open Market Operation
1.2.5. Central bank will buy more government securities; treasury bills and bonds from public
1.2.5.1. Commercial bank have more excess reserve to be loaned out
1.2.5.1.1. MS ↑ , C ↑ , AD ↑
1.3. direct measure
1.3.1. i) Creation of new job oppurtunities
1.3.2. ii) Provision of professional skills and technical duration
1.3.3. iii) Development of new land/area
1.3.4. iv) Disseminate info of job vacancies
1.3.5. v) Migration of labor to needed area
1.3.6. vi) Birth control
1.3.7. vii) Provide more training @ retraining
1.3.8. viii) Encourage people to be entrepreneur
2. Effects
2.1. Individual effects
2.1.1. people lose job & income
2.1.1.1. lead to poverty
2.1.1.1.1. ↑ poverty rate
2.2. Social effects
2.2.1. ↑ in crime and social ills
2.2.1.1. ↑ cases of snatch theft, burglary, family problems and domestic violence
2.2.1.1.1. ↓ in job performance
2.2.1.1.2. ↓ productivity of individuals
2.2.1.1.3. ↑ government spending , securities and health
2.3. Economic effects
2.3.1. resources not fully utilized
2.3.1.1. output produced < potential output level = loss of output, loss of income and lower economic growth rate
2.3.2. higher government spending
2.3.2.1. Ex : USA and Canada - provide financial help to the unemployed thus increased the government expenditure
3. Definition
3.1. no of people who can work but are not working, or not having suitable jobs and looking for other jobs
3.2. Unemployment rate = ( No of unemployed / labor force ) x 100
4. Type and causes
4.1. Residual Unemployment
4.1.1. virtually unemployable on a permanent basis
4.1.2. difficult to cope with the demands of modern production methods and the disciplined of organized works
4.2. Frictional Unemployment
4.2.1. short term
4.2.2. result from normal turnover in the economy
4.2.3. three main groups
4.2.3.1. look for a job for the first time ( ex : fresh grads, school-leavers )
4.2.3.2. job hoppers ( ex : fired from their jobs , voluntarily quit but looking for another job )
4.2.3.3. Re-entrants ( ex : housewife )
4.3. Structural Unemployment
4.3.1. due to changes in the structure of the economy
4.3.2. lack the necessary skills for jobs available or have particularly skills that are no longer in demand
4.4. Cyclical unemployment
4.4.1. result from short term cyclical fluctuations in the economy
4.4.2. happens when firms have to retrench some workers in response to a fall in AD during recession
4.5. Seasonal unemployment
4.5.1. unemployment can be predicted to recur periodically according to the time of the year
4.5.2. affects
4.5.2.1. agriculture
4.5.2.2. tourism related occupations
4.5.2.3. educations
4.6. Hidden unemployment
4.6.1. employed but are not productive