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What Are the Causes of a High Unemployment Rate?

Economists consider people unemployed if they do not have a job but are looking for a job. There are three main types of unemployment: frictional, cyclical and structural. Frictional unemployment refers to people who are relocating or waiting for a job to begin. Cyclical unemployment involves unemployment caused by changes in the economy, such as changes in demand for certain products or services. Structural unemployment refers to people whose skills are not in demand or who are not qualified for existing job vacancies. Although there is no consensus on the exact causes of unemployment, most economists agree that several factors contribute to high unemployment rates.

Welfare Payments

Welfare payments, or government assistance to the unemployed, increases unemployment rates in two ways. First, government assistance usually requires recipients to label themselves as looking for a job, even if they are not. Therefore, people who would not be looking for a job must, in order to receive assistance, be counted as if they are. Secondly, government assistance creates an incentive for people to stay unemployed, since they are receiving benefits without having a job.

Unemployment Insurance

Unemployment insurance similarly contributes to high unemployment because it makes unemployment less costly to people. Studies show that people wait longer to find another job if they have unemployment insurance.

Unionization

Unionization also contributes to high unemployment rates because it creates wages that are above market level. This leads to a demand for union jobs that exceeds supply, resulting in unemployment.

Technology

Technological development contributes to unemployment because it causes changes in demand. As new industries develop, old ones suffer. Retraining programs can help people who are unemployed due to technological development and other changes in demand.

Minimum Wage Requirements

Minimum wage requirements contribute to unemployment by forcing firms to pay their employees a certain baseline wage, which distorts the labor market. This means that firms must eliminate some jobs that may not be worth the rate of the government mandated minimum wage they are required to pay.



Tips to Find a Job from Millions of Job Listings Online in Australia

Window Washer Job Description

Window washers clean and dry windows on the exterior and interiors of buildings. They are typically employed by window cleaning firms or by building maintenance firms that undertake cleaning and decorating work, too. Many window washers run their own business. Window washers work on private homes an ...

What Jobs Can a Degree in Travel & Tourism Get You?

By any measure, travel and tourism is big business. Americans spend an estimated $646 billion per year in the recreation industry, which provides 6.1 million jobs and nets $80 billion in federal, state and local taxes nationwide, according to a study conducted in 2012 by the Outdoor Association Ind ...

Write a Career Change Cover Letter

If you're applying for jobs that are clearly a change from your previous career, it's important to include a career change cover letter. This allows the interviewer the chance to see why you're applying for a particular job and why you would be the best person to hire for the job. There are certain ...

Job Description of a Greenhouse Worker

Working in a greenhouse gives plant lovers the opportunity to grow vibrant flowers and juicy tomatoes in a nearly ideal, climate-controlled and pest-free environment. You’ll work long hours on your feet and need to learn the proper care for each unique species. But for nature lovers who can ...

Concrete Work Job Description

Concrete workers--also known as cement masons--mix, spread, compact, finish and cure concrete for buildings, bridges, tunnels and roads using hand tools, troweling machinery and other power tools. Concrete is the foundation of everything from home patios to miles of freeways, and it is the concrete ...

Pros & Cons of a Court Reporting Career

For the right person, court reporting can be a rewarding, long-lasting career. But it's not a career for everyone. Making a verbatim record of legal proceedings or providing closed captioning for the deaf and hard of hearing community is an awesome responsibility. It takes determination, professiona ...

Do a Basic Job Resume

Determine the format of your resume. Microsoft Word has sample resume templates you can use, or you can develop your own format. Use an easy-to-read font like Times New Roman or Arial and set the size anywhere from 11 point to 14 point. List your contact information clearly at the top of the pag ...

Utility Worker Job Description

A utility worker performs various tasks that help people get through the day. Though often overlooked, everyday tasks like turning on the lights and flushing the toilet are made possible because of the craft of utility workers. According to the U.S. Bureau of Labor Statistics, some utility workers a ...

Take a Job Assessment Test

Companies often administer a job assessment test, also known as a pre-employment assessment test, to determine whether an applicant is a good fit for a position. It's important to keep a few factors in mind when answering questions. Here are a few pointers on how to take a job assessment test. Expe ...

Types of Selling Jobs

The purpose of every sales job, regardless of the industry or employer, is to close the deal by selling a product or service. The difference between selling jobs is in the sales pitch. Some positions don't engage in any selling activities other than accepting payment; other selling jobs require enga ...

Build a Career as a Notary Signing Agent

A notary signing agent, also called a mortgage signing agent, is a state commissioned notary public who verifies legal documents at mortgage closings. Signing agents are independent contractors hired by mortgage lenders to handle the signing and notarizing portions of mortgage documents. Become a n ...

Replay Jobs on "Sly 2"

Released for the PlayStation 2 game console in 2004, "Sly 2: Band of Thieves" is a sequel to "Sly Cooper and the Thievius Raccoonus." With multi-character gameplay across eight episodes, there are a number of jobs to complete. However, the linear narrative of the game can make it difficult to jump b ...

Careers Related to Accounting

If you are considering accounting but want to keep your options open, a master's in business administration with a concentration in accounting can be a better alternative to getting a master's in accounting. An MBA will give you transferable skills that will give you more flexibility in choosing di ...

Compare Careers in Real Estate

Finding the right career can be difficult. If you want to enter a career in real estate, you will need to first decide on what kind of real estate career you want. Create a list of career characteristics that you are looking for. For example, do you want to make a regular salary or do you want to b ...

Job Fields Related to Cake Decorating

If you've got an eye for style, a keen sense of design and solid baking skills, you have many career options in the cooking and baking fields. While many people start out baking and decorating cakes in their home kitchens, elite bakers can go on to have careers as cake decorators, catering chefs or ...