Unemployment

Types of Unemplyment; Views by Economic Schools;

THE FOLLOWING NOTES ARE THE BASIC CONCEPTS IN THE MAINSTREAM (CAPITALISTIC, NEO-CLASSICAL) ECONOMICS.

Types

  • Frictional
    • People are voluntarily between jobs or leaving them
    • Freedom and Vitality
  • Seasonal
    • Due to the nature annual cycle of the seasons
  • Cyclical
    • Due to the business cycle of booms and recessions
  • Structural
    • Some types of jobs become obsolete due to the technological/social/political changes

Views by Schools

  • Classical
    • Unemployment is a self-correcting problem.
    • Labor market is like other market of products; supply, demand, and price (wage) will handle the problem automatically
    • Unemployment is a surplus in the labor market
  • Keynesian
    • LaborĀ is not a free-market in reality
    • Wages are flexible
    • For full employment, the government intervention is required
    • How to keep the unemployment rate stable
      • Consumption
      • Investment
      • Government Spending

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