Unemployment General

Unemployment General

Unemployment General .unemploymentresults from a general falling off in the demand for labour caused, for example, by a reduction in the total amount of spending in the economic system. Such a reduction may originate in structural maladjustments in the economy or may be brought about by Government to avoid strain on sterling because high costs have reduced exports.

Cyclical .unemploymentwas the most evident symptom of the downswing in the trade cycle before World War II. It was Keynes's argument that at such times the Government should maintain the demand for labour by keeping up the supply of money and spending by low interest rates, tax reliefs and by undertaking 'public works'.

Institutional .unemploymentarises from obstacles put in the way of the mobility of labour by public or private policy: e.g. Government restriction of rents induces older people to remain in homes that might be occupied by younger workers; local authority council housing gives the occupiers 'squatters' rights' and makes them reluctant to move for fear of paying higher rents elsewhere; trade unions negotiate national wage rates that apply to all areas, including north-east England and Northern Ireland, from which high wages discourage movement and in which lower wages might reduce costs and increase employment; trade unions try to maintain closed shops, demarcation rules that reserve jobs to particular workers, unnecessarily long apprenticeship periods, etc.; nationalized industries and private firms in sellers' markets hold on to labour, or concede higher pay, in spite of large losses and a scarcity of labour elsewhere.

ExamplesEconomic - Economic Rent


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