Wednesday, May 11, 2016

Economy 101 - Unemployment

The unemployment rate is calculated as a percentage by dividing the number of unemployed individuals by all individuals currently in the labor force. In 2012, more than 200 million people globally (6% of the world's workforce) had no job.

No one agrees on causes and solutions for unemployment. Classical and new classical economics, as well as the Austrian School of economics argue that market mechanisms are reliable means of resolving unemployment outside of interventions like unionization, work rules, minimum wage laws or other regulations that discourage hiring.

Keynesian economics point to the cyclical nature of unemployment and recommends government interventions in the economy. they can include financial stimuli, publicly funded job creation, and expansionist monetary policies.

Besides these theories, there are a few categories of unemployment that more precisely define nature of unemployment

These include structural economic problems and inefficiencies within the labor markets, such as mismatch between supply demand of workers with the skills actually needed. There are also all the workers that are not counted because they're not actively seeking jobs and that that are underemployed.

Most advanced economies have unemployment rates hovering between 2 and 10% while the rest fares far less favorably. As for future trends, continued automation, increased productivity and exploding population growth don't bode well for the labor market.

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