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Introduction This paper explores unemployment and the unemployment rate and the main economic factor that makes the rate fluctuate so much. Although the unemployment rate is the highest in years, by comparison it may be very small. This paper will discuss the mark of a recession on the unemployment rate within the economy. Unemployment Rate The unemployment rate is defined as the percentage of the labor force that is unemployed. The labor force consists of those who are either working or looking for work (Taylor 2001).
In the Economy Economists say the rise of the unemployment rate can almost always be contributed to by a recession. Even as the economy rises and jobs are added to the economy the unemployment rate may still rise as well. This is due to the fact that the two numbers are generated from different surveys. The unemployment rate comes from a survey of households, whereas the payrolls data comes from a survey of businesses. Also, that payroll data is subject to dramatic revision. For example, the governments initial reading of growth outside the farm sector in March found 58, 000 new jobs, but the number was later revised to a loss (CNN 2002).
Gerard Jackson has a theory as to why a recession changes the unemployment rate so much. The failure to understand the forces that result in succeeding recessions being accompanied by higher levels of unemployment is due to the acceptance of two economic fallacies: treating money as neutral and capital as homogeneous. If money is neutral then that will only change output and the price level. Hence, changes in money supply will only misdirect production, creating mal investments.
It also follows that if capital is homogeneous (meaning that all capital goods are perfect substitutes for each other) bottlenecks cannot occur and capital cannot be lost through malinvestents (Jackson 2001). Since this is a macroeconomics paper lets take a few paragraphs to focus on a few views from a different economy. The next two paragraphs are strictly devoted to New Zealand. It should be interesting to see the economic problem of unemployment, and how they handle it in their country. At the heart of the unemployment problem is capitalism- it cannot do away with unemployment because it is a crisis-ridden system.
Huge economic crises began in Britain in 1825 and followed on average every ten years. The cycle has continued in the twentieth century, marked by the extremely severe crisis in the 1930 s, although the periodicity of the recessions has varied since then Certain measures have been taken and tried out to try to ease the blow of unemployment. The most recently was ushered in 1999, called work-for-the-dole, marking a new low in government policies. It is nothing more than slavery, reducing the wages to the level of the dole. Then there are numerous other schemes: Taskforce Green, Job Plus, Job Link, TOPs courses Skill NZ, Conservation Corps, Youth Service Corps, Enterprise Allowance and Limited Service Volunteers (Army/Navy). None of these solve the unemployment problem.
Now you can see how this problem relates to somewhere on the other side of the world. Also quoted in this same article is how Marxist Frederick Engels called the unemployed the reserve army of labour (Unemployment 1999). Conclusion As you can see unemployment is a very real issue in todays economy. Economists study it every day, and every quarter the unemployment rate is documented and published. Economists say that the recession we are in has increased the unemployment rate, and are trying to make it sound like such a high rate. When looking at the rate now compared to the rate back in the 1930 s its easy to see that the unemployment today may be high for now, but not even close to being at the levels of the great depression.
Granted, the unemployment rate has risen since the September 11 th attacks on the world trade center, they are still no comparison to the past.
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Research essay sample on Unemployment Rate Labor Force
