Answer to Question #79799 in Macroeconomics for Nomsa

Question

Many African countries are struggling with the level of unemployment especially youth unemployment. In Zambia the government has come up with various initiatives to combat youth unemployment such as the youth fund.
a) Define and calculate the unemployment rate for Zambia given the information below:
Number of inhabitants: 10 million
Labour-force participation: 62 %
Unemployed persons: 455'000
b) Using the information in (a) calculate the participation rate and define it.
c) List and briefly explain any four types of unemployment.

Answer 1

a) Unemployment rate = 455'000/6'200'000 * 100 = 7.3 %
b) Coefficient of participation
The indicator is the ratio of the labor force to the total adult population, expressed as a percentage. Participation in the labor force: 62% participation rate
c) Frictional unemployment - is associated with the time spent looking for a new job and lasts 1-3 months.
Suppose that the labor market is in a state of equilibrium, that is, with the wage prevailing on the market, the amount of labor required is equal to the amount of labor offered. Frictional unemployment arises from the dynamism of the labor market.
Structural unemployment - is associated with technological changes in production, which change the structure of demand for labor (arises if an employee dismissed from one industry can not settle into another).
This type of unemployment arises if the sectoral or territorial structure of the demand for labor changes. Over time, important changes in the structure of consumer demand and in production technology, which in turn, change the structure of the overall demand for labor. If the demand for workers in this profession or in the region falls, then unemployment appears. Released workers can not quickly change their profession and qualifications or change their place of residence and remain unemployed for a while.
Seasonal unemployment - is due to seasonal fluctuations in the volume of production of certain industries.
Seasonal unemployment is similar to cyclical in the sense that it is also caused by fluctuations in the demand for labor. However, in this case, these oscillations can be predicted with sufficient accuracy.
In industries with seasonal demand firms prefer to lay off workers, rather than reduce wages for the same reasons as in the case of cyclical fluctuations.
Cyclic unemployment - occurs during a cyclical economic downturn and a lack of demand. It arises from the connection with the reduction of real GNP and the release of part of the labor force.
Cyclic unemployment is associated with fluctuations in business activity (the Economic cycle). It occurs when the fall in aggregate demand for manufactured products causes a decline in the aggregate demand for labor in the conditions of the inflexibility of real wages downward.