What affects unemployment rate?

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What affects unemployment rate?credit repair

Open unemployment is associated with capitalist economies.[citation needed] Preliterate communities treat their members as parts of an extended family and thus do not allow unemployment.[citation needed] In precapitalist societies such as European feudalism, the serfs, though clearly dominated and exploited by the lords, were never %26quot;unemployed%26quot; because they had direct access to the land, and the needed tools, and could thus work to produce crops. Just as on the American frontier during the nineteenth century, there were day laborers and subsistence farmers on poor land, whose position in society was somewhat analogous to the unemployed of today. But they were not truly unemployed, since they could find work and support themselves on the land.[citation needed]

Under both ancient and modern systems of slave-labor, slave-owners never let their property be unemployed for long. (If anything, they would sell the unneeded laborer.) Planned economies such as the old Soviet Union or today%26#039;s Cuba typically provide occupation for everyone, using substantial overstaffing if necessary. (This is called %26quot;hidden unemployment,%26quot; which is sometimes seen as a kind of underemployment, definition 3.)[citation needed] Workers%26#039; cooperatives 鈥?such as those producing plywood in the U.S. Pacific Northwest 鈥?do not let their members become unemployed unless the co-op itself goes bankrupt.[citation needed]

Since not all unemployment may be %26quot;open%26quot; and counted by government agencies, official statistics on unemployment may not be wholly accurate under capitalism.[citation needed] Most poorer capitalist countries lack a modern welfare state and unemployment insurance so that it is very difficult to afford being unemployed for very long: people often end up taking jobs below their skill levels.[citation needed]

Others argue that unemployment actually increases the more the government intervenes into the economy. For example, minimum wages raise costs of doing business and businesses respond by laying off workers.[citation needed] Laws restricting layoffs make businesses less likely to hire in the first place leaving many young people unemployed and unable to find work.[citation needed]

The results of both actions lead to less productivity and are claimed to incur a higher cost on society as a whole. The results lead to not just higher unemployment but may increase poverty. This is why the less market oriented countries of Europe often sustain substantially high unemployment rates in comparison to the United States; that is, government induced employment through policies designed to protect the worker.[citation needed] The welfare state then responds with various benefits that are paid for by the middle and upper class which reduces their ability to consume and is theorised to reduce the incentive to work hard and innovate.[citation needed] Economists like Ludwig Von Mises, Milton Friedman, Friedrich Von Hayek, and many others not only believe that the welfare of society decreases with this kind of intervention but that these economic policies are not sustainable.[citation needed]

[edit] Debate on causes

There is considerable debate among economists as to the causes of unemployment. Keynesian economics emphasizes unemployment resulting from insufficient effective demand for goods and service in the economy (cyclical unemployment). Others point to structural problems, inefficiencies, inherent in labour markets (structural unemployment). Classical or neoclassical economics tends to reject these explanations, and focuses more on rigidities imposed on the labor market from the outside, such as minimum wage laws, taxes, and other regulations that may discourage the hiring of workers (classical unemployment). Yet others see unemployment as largely due to voluntary choices by the unemployed (frictional unemployment). On the other extreme, Marxists see unemployment as a structural fact helping to preserve business profitability and capitalism.

Though there have been several definitions of voluntary and involuntary unemployment in the economics literature, a simple distinction is often applied. Voluntary unemployment is attributed to the individual unemployed workers (and their decisions), whereas involuntary unemployment exists because of the socio-economic environment (including the market structure, government intervention, and the level of aggregate demand) in which individuals operate. In these terms, much or most of frictional unemployment is voluntary, since it reflects individual search behavior. On the other hand, cyclical unemployment, structural unemployment, classical unemployment, and Marxian unemployment are largely involuntary in nature. However, the existence of structural unemployment may reflect choices made by the unemployed in the past, while classical unemployment may result from the legislative and economic choices made by labor unions and/or political parties. So in practice, the distinction between voluntary and involuntary unemployment is hard to draw. The clearest cases of involuntary unemployment are those where there are fewer job vacancies than unemployed workers even when wages are allowed to adjust, so that even if all vacancies were to be filled, there would be unemployed workers. This is the case of cyclical unemployment and Marxian unemployment, for which macroeconomic forces lead to microeconomic unemployment. See also: unemployment types

Some argue one of the main causes of unemployment in a free market economy is that the law of supply and demand is not really applied to the price to be paid for employing people. In situations of falling demand for products and services the wages of all employees, from president to errand boy, are not automatically reduced by the required percentage to make the business viable. Others say that it is the market that determines the wages based on the desirability of the job. The more people qualified and interested in the job, the lower the wages for that job become. Based on this view, the profitability of the company is not a factor in determining whether or not the work is profitable to the employee. People are laid off, because pay reductions would reduce the number of people willing to work a job. With fewer people interested in a particular job, the employees bargaining power would actually rise to stabilize the situation, but their employer would be unable to fulfill their wage expectations. In the classical framework, such unemployment is due to the existing legal framework, along with interferences with the market by non-market institutions such as labor unions and government. Others say many of the problems with market adjustment arise from the market itself (Keynes), or from the nature of capitalism (Marx).

In developing countries unemployment is often caused by burdensome government regulation. The World Bank%26#039;s Doing Business project shows how excessive labor regulation increases unemployment among women and youths in Africa, the Middle East and Latin America. However, lack of regulations could also cause the same effect. In the end, it must be a balance.

What affects unemployment rate?

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Unemployment is the state in which a person is without work, available to work, and is currently seeking work. The unemployment rate is used in economic studies and economic indexes such as the United States%26#039; Conference Board%26#039;s Index of Leading Indicators. The rate is determined by dividing the number of unemployed workers by the total civilian labor force Economists distinguish between five major kinds of unemployment, i.e., cyclical, frictional, structural, classical, and Marxian. (Another distinction, not discussed here, is between voluntary and involuntary unemployment.) Real-world unemployment may combine different types, while all five might exist at one time. The magnitude of each of these is difficult to measure, partly because they overlap and are thus hard to separate from each other. All but cyclical unemployment can be seen as existing at full employment, the level of employment and unemployment that represents the inflation barrier to demand-side growth.