UNEMPLOYMENT

Unemployment

Unemployment

Introduction

Unemployment forced or unemployment of employees who can and want to work but cannot find a job work. In societies where most people live to work for others, not able to find a job is a serious problem. Because the human costs resulting from the deprivation and feelings of rejection and failure staff, the level of unemployment is commonly used as a measure of worker welfare. The proportion of workers unemployed also shows if they are properly taking advantage of resources the country's human and serves as an index of economic activity (Rifkin, 2005, 995).

Discussion

Neoclassical economists consider the labor market in the same way as the rest of the market factor goods and services. Wages are the price to be paid for services rendered by labor. The higher the wage, the lower the quantity demanded and the higher the quantity supplied (Blanchard, 2003, 33). The analysis is based on the neoclassical assumption of wage flexibility. The movements that may occur in the functions of demand and supply of workers suffer wage increases in any case will be determined at the point as to equalize supply and demand. There are two kinds of unemployment, voluntary and involuntary, which may occur within this framework. At the point of equilibrium all workers who wish to find employment, but there are a number of people who will not be willing to work to find excessively low wages, that unemployment is voluntary. If some external factor, unions, government - preventing the adjustment of wages, involuntary unemployment appears (Blanchard, 2009, 29).

The persistence of a certain level of permanent layoff is explained in the neoclassical model with two types of reasons: the frictional and structural unemployment. Even in more favorable economic conditions, in situations of full employment, will be a certain number of workers unemployed for frictional or structural reasons. It's called "normal" rate of unemployment or inevitable (Keynes, 1936, 121).

In the Keynesian model, the main cause of unemployment must be sought in the inadequacy of aggregate demand. A simple negative change in business expectations can cause a decline in demand for capital investment which will lead to a series of chain reactions in which it loses on employment in different industries. The resulting decline in the purchasing power of workers may aggravate the vicious circle indefinitely prolonging unemployment (Lucas, 2001, 9).

Keynesians reject the labor market's ability to adjust to the new situation by changing wages. And if the balance in the market for a factor or an asset cannot be achieved by means of prices, will be achieved by means of quantities appearing a disparity between the quantities supplied and demanded. Is the downward rigidity of wages which prevents the decline in demand will lead to wage declines that have a situation of involuntary unemployment? The assumption of wage rigidity can be relaxed if we consider that workers have the money illusion, ie what their agreements are negotiated in nominal wages, not real, so that, if given simultaneously with unemployment and inflation may result in ...