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Unemployement: refers to the number of people of the legal working age who…

- - - - time lag before job seekers find right job / firms hire right candidate
  - - - Lowered demand in a specific industries
        
        due to changes in consumer taste and preference
        
        competition from other industries
        
        AD falls causing cyclical and structural unemployment if fall in demand for specific sectors is permenant
    - - Technological unemployment
        
        doing away with certain jobs and skills
        
        creating new jobs the unemployed are incapable of doing
        
        Occupational Unemployment
      - Movement of industries
      - Regional unemployment
        
        Geographical unemployement
- - - - waste of scarce economic resources
        
        reduce long run potential growth of economy
        
        loss in production
        
        welfare loss to society (output forgone due to unemployment)
      - some labours may choose to exit labour market permanently as they lost motivation to search for work
        
        negative effect on LRAS and economy's potential growth
    - - fall in tax revenue (income tax or GST) (no income + reduced spending of unemployed) & increase spending on unemployed
        
        budget deficit
        
        increase tax
        
        reduce expenditure on public and merit goods
    - - waste resources in training workers
      - erosion of skills with time
        
        chances of gaining future employment is low
        
        short term actual and potential growth affected
        
        quality of workforce worsens + workers exit labour force
        
        inward shift of PPC (decreased potential capacity)
  - - - decline in physical and mental health
      - crime
      - increased divorce rates
      - lower life expectancy
      - mass protests, violence and social unrest
    - - decline in real income
      - rising scale of relative poverty
        
        income inequality rises
    - - above average unemployment areas suffer ageing potential workforce
        
        less attractive as investment location for new business
- - - - expansionary monetary policy
      - expansionary fiscal policy
    - - reduce structural rigidity
        
        recommending wage cuts
        
        provide subsidies to reduce cost of production
  - - - upgrading skills of workforce
        
        retraining facilities
        
        government provide incentive/grants for skills upgrading to workers
        
        education system geared towards changing economy
      - subsidies to manage the change in economic structure
        
        location of industry controlled
        
        growing industries move into depressed area and create employment opportunities
  - - - improvements in the employment exchange services
    - - job portals