Assignment Mgt 340

7/31/2019 Assignment Mgt 340

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PREPARED BY:

SITI NUR HANIS BINTI RAMLI

MATRIX NO:

2007107513

PREPARED FOR:

MADAM NIK SARINA BINTI NIK MD. SALLEH

GROUP:

BMD 5PA

SUBMITTED DATE:

19 SEPTEMBER 2010


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Acknowledgement

Assalamualaikum

Alhamdulillah, praise to Allah S.W.T, the Almighty for giving I the chance to start and

finish this assignment successfully. Without His blessings I would not be able to complete

this task.

Secondly, I would like to thank to my lecturer,Madam Nik Sarina Binti Nik Md. Salleh,

for her guidance and advises given through out the completion of this task. Her guidances

and advises are really helpful to ensure the progress of this task are done according to the

task time line. Without her helps,I might not be able to complete this task.

Thank you.


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ARTICLE ABOUT UNEMPLOYMENT

UNEMPLOYMENT

Unemployment occurs when a person is able and willing to work but currently is without

work.[2]The prevalence of unemployment is usually measured using the unemployment rate,

which is defined as the percentage of those in thelabor forcewho are unemployed. The

unemployment rate is used ineconomicstudies andindicesincluding theUnited States'

Conference Board'sIndex of Leading Indicatorsamacroeconomicmeasure of the state of the

economy.

The causes of unemployment are disputed.Keynesian economicsemphasizes unemployment

resulting from insufficienteffective demandfor goods and services in the economy (cyclical

unemployment). Others point to structural problems and inefficiencies inherent in labour

markets;structural unemploymentinvolves mismatches between demand and supply of

laborers with the necessary skillset, sometimes induced bytechnologiesorglobalisation.Classicalorneoclassical economicstends to reject these explanations, and focuses more on

rigidities imposed on the labor market from the outside, such as unionization, 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 based on

how much someone values their own work and how that compares to current wage rates and

the time it takes to find a new job (frictional unemployment).Behavioral economics

highlights phenomena such assticky wagesandefficiency wageswhich may lead to

unemployment.

There are also different ways national statistical agencies measure unemployment. These

differences may limit the validity of international comparisons of unemployment data."[3]

Tosome degree these differences remain despite national statistical agencies increasingly

adopting the definition of unemployment by the International Labor Organization.[4]

To

facilitate international comparisons, some organizations, such as theOECD,Eurostat, and

International Labor Comparisons Program, adjust data on unemployment for comparability

across countries.

Different countries experience different levels of unemployment; traditionally, theUnited

Statestends to experience lower unemployment levels than countries in theEuropean

Union,[5]

although there is some variation there, with countries like theUKandDenmark

outperformingItalyandFranceand it also changes over time (e.g. theGreat Depression)

throughouteconomic cycles.

An 1837 political cartoon about unemployment in the United States.

There are limited historical records on unemployment because it has not always been

acknowledged or measured systematically. Industrialization involves economies of scale that

often prevent individuals from having the capital to create their own jobs to be self-employed.

An individual who cannot either join an enterprise or create a job is unemployed. As

individual farmers, ranchers, spinners, doctors and merchants are organized into large

enterprises, those who cannot join or compete become unemployed. Recognition of

unemployment occurred slowly. For example, in 16th centuryEnglandno distinction wasmade betweenvagrantsand the jobless; both were simply categorised as "sturdy beggars", to
http://en.wikipedia.org/wiki/Wage_labourhttp://en.wikipedia.org/wiki/Unemployment#cite_note-a-1http://en.wikipedia.org/wiki/Unemployment#cite_note-a-1http://en.wikipedia.org/wiki/Unemployment#cite_note-a-1http://en.wikipedia.org/wiki/Labor_forcehttp://en.wikipedia.org/wiki/Labor_forcehttp://en.wikipedia.org/wiki/Labor_forcehttp://en.wikipedia.org/wiki/Economicshttp://en.wikipedia.org/wiki/Economicshttp://en.wikipedia.org/wiki/Economicshttp://en.wikipedia.org/wiki/Index_%28economics%29http://en.wikipedia.org/wiki/Index_%28economics%29http://en.wikipedia.org/wiki/Index_%28economics%29http://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/The_Conference_Boardhttp://en.wikipedia.org/wiki/Index_of_Leading_Indicatorshttp://en.wikipedia.org/wiki/Index_of_Leading_Indicatorshttp://en.wikipedia.org/wiki/Index_of_Leading_Indicatorshttp://en.wikipedia.org/wiki/Macroeconomicshttp://en.wikipedia.org/wiki/Macroeconomicshttp://en.wikipedia.org/wiki/Macroeconomicshttp://en.wikipedia.org/wiki/Keynesian_economicshttp://en.wikipedia.org/wiki/Keynesian_economicshttp://en.wikipedia.org/wiki/Keynesian_economicshttp://en.wikipedia.org/wiki/Effective_demandhttp://en.wikipedia.org/wiki/Effective_demandhttp://en.wikipedia.org/wiki/Effective_demandhttp://en.wikipedia.org/wiki/Unemployment_types#Cyclical_or_Keynesian_unemploymenthttp://en.wikipedia.org/wiki/Unemployment_types#Cyclical_or_Keynesian_unemploymenthttp://en.wikipedia.org/wiki/Unemployment_types#Cyclical_or_Keynesian_unemploymenthttp://en.wikipedia.org/wiki/Unemployment_types#Cyclical_or_Keynesian_unemploymenthttp://en.wikipedia.org/wiki/Unemployment_types#Structural_unemploymenthttp://en.wikipedia.org/wiki/Unemployment_types#Structural_unemploymenthttp://en.wikipedia.org/wiki/Unemployment_types#Structural_unemploymenthttp://en.wikipedia.org/wiki/Disruptive_technologyhttp://en.wikipedia.org/wiki/Disruptive_technologyhttp://en.wikipedia.org/wiki/Disruptive_technologyhttp://en.wikipedia.org/wiki/Globalisationhttp://en.wikipedia.org/wiki/Globalisationhttp://en.wikipedia.org/wiki/Globalisationhttp://en.wikipedia.org/wiki/Classical_economicshttp://en.wikipedia.org/wiki/Classical_economicshttp://en.wikipedia.org/wiki/Neoclassical_economicshttp://en.wikipedia.org/wiki/Neoclassical_economicshttp://en.wikipedia.org/wiki/Neoclassical_economicshttp://en.wikipedia.org/wiki/Unemployment_types#Classical_unemploymenthttp://en.wikipedia.org/wiki/Unemployment_types#Classical_unemploymenthttp://en.wikipedia.org/wiki/Unemployment_types#Classical_unemploymenthttp://en.wikipedia.org/wiki/Unemployment_types#Classical_unemploymenthttp://en.wikipedia.org/wiki/Frictional_unemploymenthttp://en.wikipedia.org/wiki/Frictional_unemploymenthttp://en.wikipedia.org/wiki/Frictional_unemploymenthttp://en.wikipedia.org/wiki/Behavioral_economicshttp://en.wikipedia.org/wiki/Behavioral_economicshttp://en.wikipedia.org/wiki/Behavioral_economicshttp://en.wikipedia.org/wiki/Sticky_wageshttp://en.wikipedia.org/wiki/Sticky_wageshttp://en.wikipedia.org/wiki/Sticky_wageshttp://en.wikipedia.org/wiki/Efficiency_wageshttp://en.wikipedia.org/wiki/Efficiency_wageshttp://en.wikipedia.org/wiki/Efficiency_wageshttp://en.wikipedia.org/wiki/Unemployment#cite_note-2http://en.wikipedia.org/wiki/Unemployment#cite_note-2http://en.wikipedia.org/wiki/Unemployment#cite_note-2http://en.wikipedia.org/wiki/Unemployment#cite_note-3http://en.wikipedia.org/wiki/Unemployment#cite_note-3http://en.wikipedia.org/wiki/Unemployment#cite_note-3http://en.wikipedia.org/wiki/Oecd#Statisticshttp://en.wikipedia.org/wiki/Oecd#Statisticshttp://en.wikipedia.org/wiki/Oecd#Statisticshttp://en.wikipedia.org/wiki/Eurostathttp://en.wikipedia.org/wiki/Eurostathttp://en.wikipedia.org/wiki/Eurostathttp://en.wikipedia.org/wiki/Division_of_international_labor_comparisonshttp://en.wikipedia.org/wiki/Division_of_international_labor_comparisonshttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/European_Unionhttp://en.wikipedia.org/wiki/European_Unionhttp://en.wikipedia.org/wiki/European_Unionhttp://en.wikipedia.org/wiki/Unemployment#cite_note-4http://en.wikipedia.org/wiki/Unemployment#cite_note-4http://en.wikipedia.org/wiki/Unemployment#cite_note-4http://en.wikipedia.org/wiki/UKhttp://en.wikipedia.org/wiki/UKhttp://en.wikipedia.org/wiki/UKhttp://en.wikipedia.org/wiki/Denmarkhttp://en.wikipedia.org/wiki/Denmarkhttp://en.wikipedia.org/wiki/Denmarkhttp://en.wikipedia.org/wiki/Italyhttp://en.wikipedia.org/wiki/Italyhttp://en.wikipedia.org/wiki/Italyhttp://en.wikipedia.org/wiki/Francehttp://en.wikipedia.org/wiki/Francehttp://en.wikipedia.org/wiki/Francehttp://en.wikipedia.org/wiki/Great_Depressionhttp://en.wikipedia.org/wiki/Great_Depressionhttp://en.wikipedia.org/wiki/Great_Depressionhttp://en.wikipedia.org/wiki/Economic_cyclehttp://en.wikipedia.org/wiki/Economic_cyclehttp://en.wikipedia.org/wiki/Economic_cyclehttp://en.wikipedia.org/wiki/Englandhttp://en.wikipedia.org/wiki/Englandhttp://en.wikipedia.org/wiki/Englandhttp://en.wikipedia.org/wiki/Vagrancy_%28people%29http://en.wikipedia.org/wiki/Vagrancy_%28people%29http://en.wikipedia.org/wiki/Vagrancy_%28people%29http://en.wikipedia.org/wiki/Sturdy_beggarhttp://en.wikipedia.org/wiki/Sturdy_beggarhttp://en.wikipedia.org/wiki/Sturdy_beggarhttp://en.wikipedia.org/wiki/Sturdy_beggarhttp://en.wikipedia.org/wiki/Vagrancy_%28people%29http://en.wikipedia.org/wiki/Englandhttp://en.wikipedia.org/wiki/Economic_cyclehttp://en.wikipedia.org/wiki/Great_Depressionhttp://en.wikipedia.org/wiki/Francehttp://en.wikipedia.org/wiki/Italyhttp://en.wikipedia.org/wiki/Denmarkhttp://en.wikipedia.org/wiki/UKhttp://en.wikipedia.org/wiki/Unemployment#cite_note-4http://en.wikipedia.org/wiki/European_Unionhttp://en.wikipedia.org/wiki/European_Unionhttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Division_of_international_labor_comparisonshttp://en.wikipedia.org/wiki/Eurostathttp://en.wikipedia.org/wiki/Oecd#Statisticshttp://en.wikipedia.org/wiki/Unemployment#cite_note-3http://en.wikipedia.org/wiki/Unemployment#cite_note-2http://en.wikipedia.org/wiki/Efficiency_wageshttp://en.wikipedia.org/wiki/Sticky_wageshttp://en.wikipedia.org/wiki/Behavioral_economicshttp://en.wikipedia.org/wiki/Frictional_unemploymenthttp://en.wikipedia.org/wiki/Unemployment_types#Classical_unemploymenthttp://en.wikipedia.org/wiki/Unemployment_types#Classical_unemploymenthttp://en.wikipedia.org/wiki/Neoclassical_economicshttp://en.wikipedia.org/wiki/Classical_economicshttp://en.wikipedia.org/wiki/Globalisationhttp://en.wikipedia.org/wiki/Disruptive_technologyhttp://en.wikipedia.org/wiki/Unemployment_types#Structural_unemploymenthttp://en.wikipedia.org/wiki/Unemployment_types#Cyclical_or_Keynesian_unemploymenthttp://en.wikipedia.org/wiki/Unemployment_types#Cyclical_or_Keynesian_unemploymenthttp://en.wikipedia.org/wiki/Effective_demandhttp://en.wikipedia.org/wiki/Keynesian_economicshttp://en.wikipedia.org/wiki/Macroeconomicshttp://en.wikipedia.org/wiki/Index_of_Leading_Indicatorshttp://en.wikipedia.org/wiki/The_Conference_Boardhttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Index_%28economics%29http://en.wikipedia.org/wiki/Economicshttp://en.wikipedia.org/wiki/Labor_forcehttp://en.wikipedia.org/wiki/Unemployment#cite_note-a-1http://en.wikipedia.org/wiki/Wage_labour


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be punished and moved on.[6]

The closing of themonasteriesin the 1530s increased poverty,

as the church had helped the poor. In addition, there was a significant rise inenclosureduring

theTudor period. Also the population was rising. Those unable to find work had a stark

choice: starve or break the law. In 1535, a bill was drawn up calling for the creation of a

system ofpublic worksto deal with the problem of unemployment, to be funded by a tax on

income and capital. A law passed a year later allowed vagabonds to be whipped and hanged.[7]

In 1547, a bill was passed that subjected vagrants to some of the more extreme provisions of

the criminal law, namely two years servitude and branding with a "V" as the penalty for the

first offence and death for the second.[8]

During the reign of Henry VIII, as many as 72,000

people are estimated to have been executed.[9]

In the 1576 Act each town was required to provide work for the unemployed.[10]

The

Elizabethan Poor Lawof 1601, one of the world's first government-sponsored welfare

programs, made a clear distinction between those who were unable to work and those able-

bodied people who refused employment.[11]

Under thePoor Lawsystems ofEngland and

Wales,ScotlandandIrelandaworkhousewas a place where people who were unable to

support themselves, could go to live and work.[12]In the early 1700s, there were roughly 10million people living in England, and an estimated two million were, vagrants, rogues,

prostitutes, beggars or indigents.[13]In 18th century England, half the population was at least

occasionally dependent on charity for subsistence.[14]

By 1776 some 1,912 parish and

corporation workhouses had been established in England and Wales, housing almost 100,000

paupers.

Estimated U.S. Unemployment rate from 1800-1890. All data are estimates based on data compiled

by Lebergott.[15]

See limitations section below regarding how to interpret unemployment statistics in

self-employed, agricultural economies. See image info for complete data.

Estimated U.S. Unemployment rate from 1890-2010. 18901930 data are from Romer.[16]19301940

data are from Coen.[17]

19402009 data are fromBureau of Labor Statistics.[18]

See also "Historical

Comparability" under the Household Data section of the Explanatory Notes at

http://www.bls.gov/cps/eetech_methods.pdf.[19]

See image info for complete data.

Unemployed men, marching for jobs during the Great Depression.

In 1929, the U.S. unemployment rate averaged 3%.[20]

In 1933, 25% of all American workers

and 37% of all nonfarm workers were unemployed.[21]

In Cleveland, Ohio, the unemployment

rate was 60%; in Toledo, Ohio, 80%.[22]

Unemployment inCanadareached 27% at the depth

of the Depression in 1933.[23]In some towns and cities in the north east ofEngland,unemployment reached as high as 70%. In Germany the unemployment rate reached nearly

25% in 1932.[24]

One Soviet trading corporation in New York averaged 350 applications a day

from Americans seeking jobs in the Soviet Union.[25]

There were two million homeless people

migrating across the United States.[22]

Over 3 million unemployed young men were taken out

of the cities and placed into 2600+ work camps managed by theCCC.[26]

About 25 million people in the world's 30 richest countries will have lost their jobs between

the end of 2007 and the end of 2010 as the economic downturn pushes most countries into

recession.[27]

In April 2010, theU.S.unemployment rate was 9.9%, but the governments

broader U-6 unemployment rate was 17.1%.[28]

There are six unemployed people, on average,

for each available job.[29]Men account for at least 7 of 10 workers who lost jobs, according toBureau of Labor Statistics data.

[30]The youth unemployment rate was 18.5% in July 2009, the
http://en.wikipedia.org/wiki/Unemployment#cite_note-5http://en.wikipedia.org/wiki/Unemployment#cite_note-5http://en.wikipedia.org/wiki/Unemployment#cite_note-5http://en.wikipedia.org/wiki/Monasterieshttp://en.wikipedia.org/wiki/Monasterieshttp://en.wikipedia.org/wiki/Monasterieshttp://en.wikipedia.org/wiki/Enclosurehttp://en.wikipedia.org/wiki/Enclosurehttp://en.wikipedia.org/wiki/Enclosurehttp://en.wikipedia.org/wiki/Tudor_periodhttp://en.wikipedia.org/wiki/Tudor_periodhttp://en.wikipedia.org/wiki/Tudor_periodhttp://en.wikipedia.org/wiki/Public_workshttp://en.wikipedia.org/wiki/Public_workshttp://en.wikipedia.org/wiki/Public_workshttp://en.wikipedia.org/wiki/Unemployment#cite_note-6http://en.wikipedia.org/wiki/Unemployment#cite_note-6http://en.wikipedia.org/wiki/Unemployment#cite_note-6http://en.wikipedia.org/wiki/Unemployment#cite_note-7http://en.wikipedia.org/wiki/Unemployment#cite_note-7http://en.wikipedia.org/wiki/Unemployment#cite_note-7http://en.wikipedia.org/wiki/Unemployment#cite_note-8http://en.wikipedia.org/wiki/Unemployment#cite_note-8http://en.wikipedia.org/wiki/Unemployment#cite_note-8http://en.wikipedia.org/wiki/Unemployment#cite_note-9http://en.wikipedia.org/wiki/Unemployment#cite_note-9http://en.wikipedia.org/wiki/Unemployment#cite_note-9http://en.wikipedia.org/wiki/Elizabethan_Poor_Law_%281601%29http://en.wikipedia.org/wiki/Elizabethan_Poor_Law_%281601%29http://en.wikipedia.org/wiki/Unemployment#cite_note-10http://en.wikipedia.org/wiki/Unemployment#cite_note-10http://en.wikipedia.org/wiki/Poor_Lawhttp://en.wikipedia.org/wiki/Poor_Lawhttp://en.wikipedia.org/wiki/Poor_Lawhttp://en.wikipedia.org/wiki/English_Poor_Lawshttp://en.wikipedia.org/wiki/English_Poor_Lawshttp://en.wikipedia.org/wiki/English_Poor_Lawshttp://en.wikipedia.org/wiki/English_Poor_Lawshttp://en.wikipedia.org/wiki/Scottish_Poor_Lawshttp://en.wikipedia.org/wiki/Scottish_Poor_Lawshttp://en.wikipedia.org/wiki/Scottish_Poor_Lawshttp://en.wikipedia.org/wiki/Irish_Poor_Lawshttp://en.wikipedia.org/wiki/Irish_Poor_Lawshttp://en.wikipedia.org/wiki/Irish_Poor_Lawshttp://en.wikipedia.org/wiki/Workhousehttp://en.wikipedia.org/wiki/Workhousehttp://en.wikipedia.org/wiki/Workhousehttp://en.wikipedia.org/wiki/Unemployment#cite_note-11http://en.wikipedia.org/wiki/Unemployment#cite_note-11http://en.wikipedia.org/wiki/Unemployment#cite_note-11http://en.wikipedia.org/wiki/Unemployment#cite_note-12http://en.wikipedia.org/wiki/Unemployment#cite_note-12http://en.wikipedia.org/wiki/Unemployment#cite_note-13http://en.wikipedia.org/wiki/Unemployment#cite_note-13http://en.wikipedia.org/wiki/Unemployment#cite_note-13http://en.wikipedia.org/wiki/Unemployment#cite_note-14http://en.wikipedia.org/wiki/Unemployment#cite_note-14http://en.wikipedia.org/wiki/Unemployment#cite_note-14http://en.wikipedia.org/wiki/Unemployment#cite_note-15http://en.wikipedia.org/wiki/Unemployment#cite_note-15http://en.wikipedia.org/wiki/Unemployment#cite_note-15http://en.wikipedia.org/wiki/Unemployment#cite_note-16http://en.wikipedia.org/wiki/Unemployment#cite_note-16http://en.wikipedia.org/wiki/Unemployment#cite_note-16http://en.wikipedia.org/wiki/Bureau_of_Labor_Statisticshttp://en.wikipedia.org/wiki/Bureau_of_Labor_Statisticshttp://en.wikipedia.org/wiki/Unemployment#cite_note-17http://en.wikipedia.org/wiki/Unemployment#cite_note-17http://en.wikipedia.org/wiki/Unemployment#cite_note-17http://www.bls.gov/cps/eetech_methods.pdfhttp://en.wikipedia.org/wiki/Unemployment#cite_note-18http://en.wikipedia.org/wiki/Unemployment#cite_note-18http://en.wikipedia.org/wiki/Unemployment#cite_note-18http://en.wikipedia.org/wiki/Unemployment#cite_note-19http://en.wikipedia.org/wiki/Unemployment#cite_note-19http://en.wikipedia.org/wiki/Unemployment#cite_note-19http://en.wikipedia.org/wiki/Unemployment#cite_note-20http://en.wikipedia.org/wiki/Unemployment#cite_note-20http://en.wikipedia.org/wiki/Unemployment#cite_note-20http://en.wikipedia.org/wiki/Unemployment#cite_note-Depression-21http://en.wikipedia.org/wiki/Unemployment#cite_note-Depression-21http://en.wikipedia.org/wiki/Unemployment#cite_note-Depression-21http://en.wikipedia.org/wiki/Canadahttp://en.wikipedia.org/wiki/Canadahttp://en.wikipedia.org/wiki/Canadahttp://en.wikipedia.org/wiki/Unemployment#cite_note-22http://en.wikipedia.org/wiki/Unemployment#cite_note-22http://en.wikipedia.org/wiki/Unemployment#cite_note-22http://en.wikipedia.org/wiki/Englandhttp://en.wikipedia.org/wiki/Englandhttp://en.wikipedia.org/wiki/Englandhttp://en.wikipedia.org/wiki/Unemployment#cite_note-23http://en.wikipedia.org/wiki/Unemployment#cite_note-23http://en.wikipedia.org/wiki/Unemployment#cite_note-23http://en.wikipedia.org/wiki/Unemployment#cite_note-24http://en.wikipedia.org/wiki/Unemployment#cite_note-24http://en.wikipedia.org/wiki/Unemployment#cite_note-24http://en.wikipedia.org/wiki/Unemployment#cite_note-Depression-21http://en.wikipedia.org/wiki/Unemployment#cite_note-Depression-21http://en.wikipedia.org/wiki/Unemployment#cite_note-Depression-21http://en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highest July rate since 1948.[31]

34.5% of young African American men were unemployed in

October 2009.[32]

Officially,Detroits unemployment rate is 27%, but theDetroit News

suggests that nearly half of this citys working-age population may be unemployed.[33]

3.8

million Americans lost their jobs in 2009.[29]

Unemployment rate for Japan 1953-2006

The official unemployment rate in the 16EUcountries that use the euro rose to 10% in

December 2009.[34]

Latviahad the highest unemployment rate in EU at 22.3% for November

2009.[35]

Europe's young workers have been especially hard hit.[36]

In November 2009, the

unemployment rate in theEU27for those aged 1524 was 18.3%. For those under 25, the

unemployment rate inSpainwas 43.8%.[37]

A flood of inexpensive consumer goods fromChinahas recently encountered criticism from

Europe, the United States and some African countries.[38]

In South Africa, some 300,000

textile workers have lost their jobs due to the influx of Chinese goods.[39]

The increasingU.S.

trade deficitwith China has cost 2.4 million American jobs between 2001 and 2008,according to a study by theEconomic Policy Institute(EPI).

[40]A total of 3.2 millionone in

six U.S. factory jobshave disappeared between 2000 and 2007.[41]

Definitions, Types and Theories

Economistsdistinguish between various overlapping types of and theories of

unemployment, includingcyclical or Keynesian unemployment,frictional unemployment,

structural unemploymentandclassical unemployment.[42]

Some additional types of

unemployment that are occasionally mentioned are seasonal unemployment, hardcore

unemployment, and hidden unemployment. The U.S. BLS measures six types ofunemployment,U1-U6.

Though there have been several definitions ofvoluntary and involuntary unemployment in

the economics literature, a simple distinction is often applied. Voluntary unemployment is

attributed to the individual's 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

offrictional unemploymentis voluntary, since it reflects individual search behavior.

Voluntary unemployment includes workers who reject low wage jobs whereas involuntary

unemployment includes workers fired due to an economic crisis, industrial decline, company

bankruptcy, or organizational restructuring.

On the other hand, cyclical unemployment, structural unemployment, and classical

unemployment are largely involuntary in nature. However, the existence of structural

unemployment may reflect choices made by the unemployed in the past, while classical

(natural) unemployment may result from the legislative and economic choices made by labor

unions orpolitical 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, some unemployed workers would still

remain. This happens with cyclical unemployment, as macroeconomic forces cause

microeconomic unemployment which can boomerang back and exacerbate these

macroeconomic forces.
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[edit] Classical unemployment

Classical or real-wage unemployment occurs when real wages for a job are set above the market-

clearing level, causing the number of job-seekers to exceed the number of vacancies.

Libertarian economists likeF.A. Hayekargued that unemployment increases the more the

government intervenes into the economy to try to improve the conditions of those with jobs.For example,minimum wagelaws raise the cost of labourers with few skills to above the

market equilibrium, resulting in people who wish to work at the going rate but cannot as wage

enforced is greater than their value as workers becoming unemployed.[43][44]

They believed

that laws restricting layoffs made businesses less likely to hire in the first place, as hiring

becomes more risky, leaving many young people unemployed and unable to find work.[44]

However, this argument is criticized for ignoring numerous external factors and overly

simplifying the relationship between wage rates and unemployment.[45][46][47][48][49]

Some, such

asMurray Rothbard,[50]

suggest that even social taboos can prevent wages from falling to the

market clearing level.

[edit] Cyclical or Keynesian unemployment

Cyclical orKeynesianunemployment, also known as deficient-demand unemployment,

occurs when there is not enough aggregate demand in the economy. It gets its name because itvaries with thebusiness cycle, though it can also be persistent, as during theGreat Depression

of the 1930s. Cyclical unemployment is caused by abusiness cyclerecession, and wages not

falling to meet the equilibrium level. Cyclical unemployment rises during economic

downturns and falls when the economy improves. Keynesians argue that this type of

unemployment exists due to inadequate effectiveaggregate demand. Demand for most goods

and services falls, less production is needed and consequently fewer workers are needed,wages do not fall to meet the equilibrium level, and mass unemployment results.

Some consider this type of unemployment one type of frictional unemployment in which

factors causing the friction are partially caused by some cyclical variables. For example, a

surprise decrease in the money supply may shock participants in society.

With cyclical unemployment, the number of unemployed workers exceeds the number of job

vacancies, so that if even all open jobs were filled, some workers would remain unemployed.

This kind of unemployment coincides with unused industrial capacity (unemployed capital

goods).Keynesianeconomists see it as possibly being solved by government deficit spending

or by expansionarymonetary policy, which aims to increase non-governmental spending byloweringinterest rates.

In contrast,Austrian economistsargue that government spending and policies are the root

cause of economic cycles and cyclical unemployment and should be reformed or removed.

Classical economicsrejects the conception of cyclical unemployment, seeing the attainment

of full employment of resources and potential output as the normal state of affairs.[citation needed]
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[edit] Structural unemployment

Main article:Structural unemployment

Structural unemploymentoccurs when a labor market is unable to provide jobs for everyone who

wants one because there is a mismatch between the skills of the unemployed workers and the skills

needed for the available jobs.[52]

Structural unemployment is hard to separate empirically from frictional unemployment,

except to say that it lasts longer. As with frictional unemployment, simple demand-side

stimulus will not work to easily abolish this type of unemployment.

Structural unemployment may also be encouraged to rise by persistent cyclical

unemployment: if an economy suffers from long-lasting low aggregate demand, it means thatmany of the unemployed become disheartened, while their skills (includingjob-searching

skills) become "rusty" and obsolete. Problems with debt may lead tohomelessnessand a fall

into the vicious circle ofpoverty. This means that they may not fit the job vacancies that are

created when the economy recovers. Some economists see this scenario as occurring under

British Prime MinisterMargaret Thatcherduring the 1970s and 1980s. The implication is that

sustained high demand may lowerstructural unemployment. This theory of persistence in

structural unemployment has been referred to as an example ofpath dependenceor

"hysteresis"

[edit] Frictional unemployment

Main article:Frictional unemployment

Frictional unemploymentis the time period between jobs when a worker moves from one job

to another. Frictional unemployment is an example of a productive part of theeconomy,

increasing both the worker's long termwelfareandeconomic efficiency, and is also a type of

voluntary unemployment.

Frictional unemployment is always present in an economy, so the level of involuntary

unemployment is properly the unemployment rate minus the rate of frictional unemployment,

which means that increases or decreases in unemployment are normally under-represented in

the simple statistics.[53]
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Measurement

Though many people care about the number of unemployed, economists typically focus on

the unemployment rate. This corrects for the normal increase in the number of people

employed due to increases in population and increases in the labor force relative to the

population. The unemployment rate is expressed as a percentage, and is calculated as follows:

As defined by theInternational Labour Organization, "unemployed workers" are those who

are currently not working but are willing and able to work for pay, currently available to

work, and have actively searched for work.[54]

Individuals who are actively seeking job

placement must make the effort to: be in contact with an employer, have job interviews,

contact job placement agencies, send out resumes, submit applications, respond to

advertisements, or some other means of active job searching within the prior four weeks.

Simply looking at advertisements and not responding will not count as actively seeking job

placement. Since not all unemployment may be "open" and counted by government agencies,

official statistics on unemployment may not be accurate.

[55]

TheILOdescribes 4 different methods to calculate the unemployment rate:[56]

Labour Force Sample Surveys are the most preferred method of unemployment rate

calculation since they give the most comprehensive results and enables calculation of

unemployment by different group categories such as race and gender. This method is the

most internationally comparable.

Official Estimates are determined by a combination of information from one or more of the

other three methods. The use of this method has been declining in favor of Labour Surveys.

Social Insurance Statistics such as unemployment benefits, are computed base on the

number of persons insured representing the total labour force and the number of personswho are insured that are collecting benefits. This method has been heavily criticized due to

the expiration of benefits before the person finds work.

Employment Office Statistics are the least effective being that they only include a monthly

tally of unemployed persons who enter employment offices. This method also includes

unemployed who are not unemployed per theILOdefinition.

Unemployment rates from 1993-2009 for United States andEuropean Union.

Eurostat, the statistical office of theEuropean Union, defines unemployed as those persons

age 15 to 74 who are not working, have looked for work in the last four weeks, and ready to

start work within two weeks, which conform toILOstandards. Both the actual count and rateof unemployment are reported. Statistical data are available by member state, for the

European Union as a whole (EU27) as well as for the euro area (EA16). Eurostat also includes

a long-term unemployment rate. This is defined as part of the unemployed who have been

unemployed for an excess of 1 year.

The main source used is the European Union Labour Force Survey (EU-LFS). The EU-LFS

collects data on all member states each quarter. For monthly calculations, national surveys or

national registers from employment offices are used in conjunction with quarterly EU-LFS

data. The exact calculation for individual countries, resulting in harmonised monthly data,

depend on the availability of the data.[57]
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United States Bureau of Labor Statistics

Unemployment rate in the US by county in 2008.[58]

1.2

3% 3.1

4% 4.15%5.1

6% 6.1

7% 7.18%8.1

9% 9.1

10% 10.111%11.1

13% 13.1

22.9%

TheBureau of Labor Statisticsmeasures employment and unemployment (of those over 15years of age) using two different labor force surveys

[59]conducted by theUnited States

Census Bureau(within theUnited States Department of Commerce) and/or theBureau of

Labor Statistics(within theUnited States Department of Labor) that gather employment

statistics monthly. TheCurrent Population Survey(CPS), or "Household Survey", conducts a

survey based on a sample of 60,000 households. This Survey measures the unemployment

rate based on theILOdefinition.[60]

The Current Employment Statistics survey (CES), or

"Payroll Survey", conducts a survey based on a sample of 160,000 businesses and governmentagencies that represent 400,000 individual employers.

[61]This survey measures only

nonagricultural, nonsupervisory employment; thus, it does not calculate an unemployment

rate, and it differs from the ILO unemployment rate definition. These two sources have

different classification criteria, and usually produce differing results. Additional data are also

available from the government, such as the unemployment insurance weekly claims report

available from the Office of Workforce Security, within the U.S. Department of Labor

Employment & Training Administration.[62]

The Bureau of Labor Statistics provides up-to-

date numbers via a pdf linked here.[63]

The BLS also provides a readable concise current

Employment Situation Summary, updated monthly.[64]

TheBLSalso calculates5 alternate measures of unemployment, U1 through U6,[65]whichhave beencharted over time

[66][67]

U1: Percentage of labor force unemployed 15 weeks or longer.

U2: Percentage of labor force who lost jobs or completed temporary work.

U3: Official unemployment rate per ILO definition.

U4: U3 + "discouraged workers", or those who have stopped looking for work because

current economic conditions make them believe that no work is available for them.

U5: U4 + other "marginally attached workers", or "loosely attached workers", or those who

"would like" and are able to work, but have not looked for work recently.

U6: U5 + Part time workers who want to work full time, but cannot due to economic reasons

(underemployment).

Note: "Marginally attached workers" are added to the total labor force for unemployment

rate calculation for U4, U5, and U6. TheBLS revised the CPS in 1994and among the

changes the measure representing the official unemployment rate was renamed U3 instead of

U5.[68]

Statistics for the U.S. economy as a whole hide variations among groups. For example, in

January 2008 U.S. unemployment rates were 4.4% for adult men, 4.2% for adult women,

4.4% for Caucasians, 6.3% for Hispanics or Latinos (all races), 9.2% for African Americans,

3.2% for Asian Americans, and 18.0% for teenagers.[61]

Also, the U.S. unemployment rate

would be at least 2% higher if prisoners and jail inmates were counted.[69][70]
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Limitations of the unemployment definition

The unemployment rate may be different from the impact of the economy on people. The

unemployment figures indicate how many are not working for pay but seeking employment for pay.

It is only indirectly connected with the number of people who are actually not working at all orworking without pay. Therefore, critics believe that current methods of measuring unemployment

are inaccurate in terms of the impact of unemployment on people as these methods do not take into

account the 1.5% of the available working population incarcerated in U.S. prisons (who may or may

not be working while incarcerated), those who have lost their jobs and have becomediscouraged

over time from actively looking for work, those who areself-employedor wish to become self-

employed, such as tradesmen or building contractors or IT consultants, those who have retired

before the official retirement age but would still like to work (involuntary early retirees), those on

disabilitypensions who, while not possessing full health, still wish to work in occupations suitable for

their medical conditions, those who work for payment for as little as one hour per week but would

like to work full-time. These people are "involuntary part-time" workers, those who are

underemployed, e.g., a computer programmer who is working in a retail store until he can find a

permanent job, involuntary stay-at-home mothers who would prefer to work, and graduate and

Professional school students who were unable to find worthwhile jobs after they graduated with

their Bachelor's degrees.

Internationally, some nations' unemployment rates are sometimes muted or appear less severe

due to the number of self-employed individuals working in agriculture. Small independent

farmers are often considered self-employed; so, they cannot be unemployed. The impact of

this is that in non-industrialized economies, such as the United States and Europe during the

early 1800s, overall unemployment was approximately 3% because so many individuals wereself-employed, independent farmers; yet, unemployment outside of agriculture was as high as

80%.[71]

Many economies industrialize and experience increasing numbers of non-agricultural

workers. For example, the United States' non-agricultural laborforce increased from 20% in

1800, to 50% in 1850, to 97% in 2000.[72]

The shift away from self-employment increases the

percentage of the population who are included in unemployment rates. When comparing

unemployment rates between countries or time periods, it is best to consider differences in

their levels of industrialization and self-employment.

Additionally, the measures of employment and unemployment may be "too high". In some

countries, the availability ofunemployment benefitscan inflate statistics since they give an

incentive to register as unemployed. People who do not really seek work may choose to

declare themselves unemployed so as to get benefits; people with undeclared paid occupations

may try to get unemployment benefits in addition to the money they earn from their work.

Conversely, the absence of any tangible benefit for registering as unemployed discourages

people from registering.

However, in countries such as the United States, Canada, Mexico, Australia, Japan and the

European Union, unemployment is measured using a sample survey (akin to a Gallup poll).

According to the BLS, a number of Eastern European nations have instituted labor force

surveys as well. The sample survey has its own problems because the total number of workers

in the economy is calculated based on a sample rather than a census.
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It is possible to be neither employed nor unemployed by ILO definitions, i.e., to be outside of

the "labor force." These are people who have no job and are not looking for one. Many of

these are going to school or are retired. Family responsibilities keep others out of the labor

force. Still others have a physical or mental disability which prevents them from participating

in labor force activities. And of course some people simply elect not to work, preferring to be

dependent on others for sustenance.

Typically, employment and the labor force include only work done for monetary gain. Hence,

ahomemakeris neither part of the labor force nor unemployed. Nor are full-time students nor

prisoners considered to be part of the labor force or unemployment. The latter can be

important. In 1999, economists Lawrence F. Katz and Alan B. Krueger estimated that

increased incarceration lowered measured unemployment in the United States by 0.17%

between 1985 and the late 1990s. In particular, as of 2005, roughly 0.7% of the U.S.

population is incarcerated (1.5% of the available working population).

Children, the elderly, and some individuals with disabilities are typically not counted as part

of the labor force in and are correspondingly not included in the unemployment statistics.However, some elderly and many disabled individuals are active in the labor market.

In the early stages of aneconomic boom, unemployment often rises. This is because people

join the labor market (give up studying, start a job hunt, etc.) because of the improving job

market, but until they have actually found a position they are counted as unemployed.

Similarly, during arecession, the increase in the unemployment rate is moderated by people

leaving the labor force or being otherwise discounted from the labor force, such as with the

self-employed.

For the fourth quarter of 2004, according toOECD, (sourceEmployment Outlook 2005 ISBN

92-64-01045-9), normalized unemployment for men aged 25 to 54 was 4.6% in the U.S. and

7.4% inFrance. At the same time and for the same population the employment rate (number

of workers divided by population) was 86.3% in the U.S. and 86.7% in France.

This example shows that the unemployment rate is 60% higher in France than in the U.S., yet

more people in this demographic are working in France than in the U.S., which is

counterintuitive if it is expected that the unemployment rate reflects the health of the labor

market.[73][74]

Due to these deficiencies, manylabor marketeconomists prefer to look at a range of

economic statistics such as labor market participation rate, the percentage of people agedbetween 15 and 64 who are currently employed or searching for employment, the total

number of full-time jobs in an economy, the number of people seeking work as a raw number

and not a percentage, and the total number of person-hours worked in a month compared to

the total number of person-hours people would like to work. In particular theNBERdoes not

use the unemployment rate but prefer various employment rates to date recessions.[75]
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SUMMARY

Unemployment is the condition of an economy with people who are considered under the

labour force but being unemployed. They are people who are job leavers, retirees, new

entrants and so on.They are 4 types of unemployment such as classical unemployment,

cyclical or Keynesian unemployment,structural unemploymen and frictional unemplyment.

Classical unemployment also known as real-wage unemployment. It occurs when real wages

for a job are set above the market-clearing level and caused the number of job-seekers to

exceed the number of vacancies.This unemployment increases the more the government

intervences into the economy to try to improve the conditions of those with job.

Another types of the unemployment is cyclical or Keynesian unemployment . It also known

as deficit-demand unemployment . For this unemployment, it occurs as a result due to

slowdown of an economy.The negative effect of depression has forced them to loose jobs

and be retrenched. At the same time, aggregate demand in the economy falls caused by the

lack of consumption of goods and services during recession. Thus, it arises due to the lack of

jobs caused by the downturn of the business cycle and falls when the economy improves.

Next is stuctural unemployment.This types of unemployment results from the structural and

technological change in the economy. It is occurs when the labour market are unable to

provide jobs for everyone who wants one.This is because of the mismatch between the skillsof the employed workers and the skills needed for the available jobs. This unemployment

may be encouraged to rise by persistent cyclical unemployment.

Lastly, the types of unemployment is frictional unemployment . It is the time period between

jobs when a worker moves from one to another job. It can be either those who leave their

jobs voluntarily to seek for new and better jobs, those who are being sacked and reentering

the labour force to search for new jobs and so on . They are temporarily unemployed

because it takes time for those individuals to search for suitable jobs that suit with their taste

and skills.

In conclusion , for classical unemployment focuses more on rigidities imposed on the labour

market from the outside such as minimum wages and other regulations that may discourged

the hiring of workers . Cyclical or Keynesian unemployment resulting from insufficient

effective demand for goods and services in the economy and for structural unemployment

involves mismatches between demand and supply of laborers with the necessary skill,

sometimes induced by technologies or globalization. Besides that, for frictional


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unemployment is a normal turnover in the labour market as a result of freedom to make a

job-choices.

CRITIQUE

Unemployment can be defined as the existence of the labour force and willing to work, but

unable to find and get employment. It is occurs when a person is able and willing to work but

currently is without work. Unemployment is measured as the percentage of the labour force

out of work.

The unemployment rate may be different from the impact of the economy on people. The

unemployment figures show and indicate how many are not working for pay but seeking

employment for pay.

Documents

Assignment Mgt 340