According to Fair macroeconomic is a section of economics that involves the structure, performance, decision-making, and behavior of the whole economy and not a particular market (102). It includes regional, worldwide, and national economies (Kim and Lee 1509-1539). Amongst many factors that determine macroeconomic are GDP, National Income, price rates, inflation, and unemployment. This paper will analyze unemployment as one of the indicators of macroeconomics.
Unemployment refers to when there are more people with no jobs for income as compared to those who are employed. The level of unemployment in a countrys economy can be measured by finding the number of those who do not have jobs. Those who are included in the labor force are in active search for jobs. As such, those who are on retirement, students, or those who are frustrated because of looking for a job without success, are not included in the labor force (Pollak 840-863).
The rate of unemployment is defined by the ratio of the number of people unemployed divided by the total of those employed and unemployed (The Economist). Consequently, unemployment rate ranging from 3% to 4% is considered low, as that ranging from 10% to 15% is considered high, and a rate of over 20% is considered very high. Unemployment results from some economical, political, educational, and cultural issues amongst others. When a country has a good economic background, then the rate of employment will be high because many sectors of the economy employ residents which in turn helps in improving their living standards. On the other hand, a weak economy leads to unemployment because it cannot manage to accommodate all those who need jobs, resulting in reduced living standards.
Some unemployment can result from low levels of education. It is because jobs may exist but on different professions and sometimes advanced skills may be needed while some residents may not have the required skills. As such increased unemployment will lead to the stagnant growth of the economy. Consequently, there are different types of unemployment depending on what causes it. One of which is classical unemployment which rises from the high rates of wages leading to employers not employing many workers. It arises from the low demand for goods and services in the market, and the business feels paying more workers will lead to low-profit margins.
The second is frictional unemployment which occurs when the job vacancies are present for a laborer, but the duration required to look for and find the work results to a phase of unemployment. The last is structural unemployment which includes a range of causes including the deviation of the laborers skills and that which is needed for the job. As such, it can occur when the economy is shifting or advancing through the upgrade of machines in industries leading to the need for other skills different from the previous ones.
In conclusion, employment leads to lack of income and can increase the levels of crime and other bad behaviors in a country. On the same note, unemployment leads to low living standards because many people will not have enough money to cater for their families. When there are small expenditures by citizens, the growth of the economy reduces. I recommend that countries should have flexible and improved education systems where workers are equipped with a broad range of skills to fit the dynamic global market. As such, when a new machine is introduced into a factory the employees already have an idea of its operation, other than replacing them with other skilled workers. Also, I suggest that countries should introduce rules guiding employers to employ a certain number of employees depending on the scale in which their businesses operate.
Fair, Ray C. "Analyzing Macroeconomic Forecastability". Journal of Forecasting 31.2 (2011): 99-108. Web.
Kim, Soyoung and Jaewoo Lee. "International Macroeconomic Fluctuations". Macroecon. Dynam. 1.07 (2014): 1509-1539. Web.
Pollak, Andreas. "Unemployment, Human Capital Depreciation, and Unemployment Insurance Policy". J. Appl. Econ. 28.5 (2012): 840-863. Web.
The Economist. "Unemployment Rate | Economist - World News, Politics, Economics, Business & Finance". The Economist. N.p., 2016. Web. 24 Apr. 2016.
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