A Brief Note On Norway 's Unemployment Rate Essay

1001 Words Oct 28th, 2016 5 Pages
his article is on Norway’s unemployment rate and details how its recent unemployment level is the highest it has been in more than a decade due to rapidly falling oil prices. In 2014, the price of oil was above $100 a barrel, however has now plunged to $40 a barrel. As a result, 30,000 workers from petroleum production companies have been fired due to the decreased aggregate demand and because of this, the unemployment rate rose to 4.8% in January 2016 from 4.6% the previous month. Unemployment is defined as the rate of working age people looking for a job, but are not employed and seeing as Norway’s unemployment is mainly caused by the decreased aggregate demand for its oil, then the type of unemployment that Norway faces is cyclical or demand-deficient unemployment. This has a large cost on the economy and society as there will be a loss of output, loss of income for the unemployed and tax for the government, increased rates of crime, homelessness, and poverty. The diagram for cyclical unemployment is below:
The diagram above illustrates cyclical unemployment where there is a decrease in aggregate demand for Norway’s oil, mainly caused by global oversupply, declining demand, and OPEC’s unwillingness to stabilize the market by cutting back on production. As a result, there is a decrease in the number of workers, and an increase in unemployment in the oil producing industry of the Norwegian labour market. As can be seen, aggregate demand performs a leftwards shift from…

Related Documents