Causes and Effects of Unemployment - 2314 Words

Causes and Effects of Unemployment Unemployment defined by the Encyclopedia Britannica is the condition of one who is capable of working, actively seeking work, but is unable to find any work. In addition, to define a person as unemployed, the person must be an active member of the labor force in search of work. (Encyclopedia Britannica, 2012) There are three different types of unemployment: frictional, structural, and cyclical. Due to various causes in the economy, there will always be a certain number of people that are frictionally or structurally unemployed. However, cyclical unemployment only happens when an economy is in a downturn. Cyclical unemployment signifies a decrease in the GDP. Unemployment produces many unpleasant†¦show more content†¦Technological changes lead to unemployment due to developments of labor saving technology. This allows for less demand of the labor force in the industry. Overall, structural unemployment is the mismatch of skills of the person to the jobs available. There are numerous reasons for structural unemployment. Due to this, economists expect there will always be some level of structural unemployment. (Tucker, 2008) Cyclical Unemployment Unlike frictional and structural unemployment, cyclical unemployment is when the economy is in a downturn. Cyclical unemployment happens because employers cannot sell enough goods to keep their employees. This has a direct link with the GDP. As the GDP goes down, the unemployment rate grows. This drop in GDP signifies a recession. (Tucker, 2008) Barriers to Job Creation Certain barriers in job creations can increase the length of time unemployment last. Three barriers to job creation are minimum wage, taxes on corporations and business, and regulatory and licensure laws. Simply put, a business or industry will create jobs where it is most cost effective and beneficial for it. Minimum wage hinders job creation because if it cost more to hire someone than the job is worth then a business will not create the job. Taxes on business and industries can also be a barrier to job creation. If the cost becomes too high for a company itShow MoreRelatedCauses And Effects Of Unemployment1611 Words   |  7 Pagesï » ¿ Causes and Effects of Unemployment Travis Epling Strayer University ENG 105 Jeanette Trammel 9/14/14 Causes and Effects of Unemployment There are many reasons for unemployment in the United States and around the world. Some of these causes are created by the individual and others are out of their control. No matter what the cause for unemployment, it has a devastating effect on the individual, family, and economy. Unemployment defined by the Encyclopedia Britannica is the conditionRead MoreEssay on Unemployment Cause and Effect705 Words   |  3 PagesUnemployment – Causes I am going to offer my theory as to the real cause of unemployment, for every cause there is an effect. The process of cause and effect.   Ã‚     Ã‚  Ã‚  It’s hard to live a normal healthy life without a job and money. There are many reasons why people are unemployed, but in turn this state of unemployment can cause one to experience financial, emotional, and personal problems.  Ã‚     Ã‚  Ã‚   The most common causes of unemployment are getting fired and laid off for specific reasonsRead MoreCauses Of Unemployment And Its Effect On The Economy2406 Words   |  10 PagesEmpirical research aims to decompose causes of unemployment into those that changed equilibrium and those that caused demand-deficient unemployment. 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