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CHAPTER 9 : UNEMPLOYMENT (TYPES (FRICTIONAL (it is (a serious problem ONLY…

- - - - there is a mismatch of skills and jobs due to a change in the structure of the economy
    - - A change in Pattern Of Demand
      - A change in Conditions of Supply
        
        Technological
        
        intro of new labour- saving tech such as automation, allows the same level of output to be produced with fewer workers
        
        Regional
        
        certain regions experience full employment but other regions have unemployment ( due to geographical immobility of labour )
  - - - real wages are forced above the market clearing level
    - - trade unions & wage councils
  - - - people leave their jobs or new entrants join the labour market
    - - imperfect info which causes
        
        time lag before job seekers find the right job and firms to hire the right candidate
    - - a serious problem ONLY IF time lag is too long
      - inevitable in a free society
- - - - expansionary monetary policies
        
        results in greater money supply and amt of credit available
      - expansionary fiscal policy
        
        govt either lowers taxes or raises expenditure on goods and services and public works
    - - reduce structural rigidities like recommending wage cuts or providing subsidies to reduce COP
        
        causes increased SRAS, increases employment
  - - - this is done by
        
        restricting power of trade unions
        
        reducing/ removing legal minimum wage