Answer to Question #300465 in Macroeconomics for Mwiza

Question

Consider the most appropriate policy for tackling each of the different types of unemployment.

Answer 1

Unemployment exist in all the economies. Certain factors leads to increase or decrease in unemployment. There are 5 different kinds of unemployment and they include frictional, structural, cyclical, seasonal, and technological unemployment. Each of them is caused by different factors in the economy.

Frictional unemployment can be reduced by doing public retraining programs, which will ease the transitioning of workers from declining to growing industries. Structural unemployment, on the other hand, can be reduced by providing geographical subsidies to firms through helping them to relocate to places where jobs exist. Cyclical unemployment can be tackled by increasing the output of a system, which is achieved by stimulating demand. The demand can be increased by decreasing the fiscal and monetary policies discouraging purchase of the output.

Economy diversification, paying workers even in temporary works throughout the year, and creation of jobs in off-season with an aim of improving infrastructure are major ways, which seasonal unemployment can be reduced. Providing educational and training reforms is one way of tackling technological unemployment because there are some jobs in the economy, which has not been fully explored. Therefore, providing educational reforms to that field will ensure some workers exploit the field and leave the one having the updated technology.