Unemployment can be divided into different types according to the reasons for its occurrence.Tags: Lord Of The Flies Essay Civilization Vs SavagerySocial Work Continuing Education CoursesHow Write A Cover Letter For My ResumeChildren Who Learn How To Solve Math Problems By RoteWriting Research Papers For CollegeGood Essay Introduction StructureSteps In Research Paper WritingMuch Ado About Nothing Essay TitlesFinance Dissertation Help
However, it is important to note that Keynes also excluded unemployment “due to the refusal or inability of a unit of labour, as a result of legislation or social practices or of a combination for collective bargaining or of a slow response to change or of mere human obstinacy, to accept a reward corresponding to the value of the product attributable to its marginal productivity”.
Thus, Keynes chose to exclude union wage differentials as well as minimum wage legislation as sources of involuntary unemployment.
In his view, unemployment results from an inflexible money wage which prevents the real wage from adjusting downwards to increase the demand for labour.
Thus the unemployment problem originates from an inappropriate real wage.
Here is an essay on ‘Unemployment’ for class 8, 9, 10, 11 and 12.
Bilateral Prothesis - Introduction For Unemployment Essay
Find paragraphs, long and short essays on ‘Unemployment’ especially written for school and college students.He introduced the concept of involuntary unemployment that had something to do with inadequate demand in final commodity markets and which could be remedied with the management of demand by fiscal policy and possibly by monetary policy too.In explaining the cause of unemployment, Keynes focuses on the role of nominal wage inflexibility.According to Keynes, the equality of the real wage to the marginal disutility of employment corresponds to the absence of ‘involuntary’ unemployment.(Keynes makes the simplification that the marginal utility of income is constant so that the marginal disutility of employment is the same as the marginal rate of substitution of income for leisure.) Keynes excluded frictional unemployment from involuntary unemployment.Clearly, Keynes wanted to focus on a particular type of involuntary unemployment.Don Patinkin also used the static labour supply definition in his well-known analysis of involuntary unemployment: The norm of reference to be used in defining involuntary unemployment is the supply curve for labour as long as workers are ‘on their labour supply curve’—that is, as long as they succeed in selling all the labour they want to at the prevailing real wage rate—a state of full employment will be said to exist in the economy. Pigou proposed measuring involuntary unemployment of a group of persons by the number of hours that these persons would have been willing to provide at the current rate of wages under current conditions of employment.For this reason the term the non-accelerating inflation rate of unemployment (NAIRU) is often preferred to the title ‘natural’ to describe the level of unemployment.The current view is that the natural rate of unemployment is the rate towards which the dynamic system is converging for a given underlying general equilibrium stochastic structure.They have reached the conclusion that if the labour market does not equilibrate, it must be because the price, i.e., the real wage, is set at an inappropriate (and not at the market-clearing) level.The demand for labour originates from the profit-maximising decisions of firms.