Theories of Unemployment Essay

1375 Words 6 Pages
Unemployment is known to be a certain number of the workforce, is temporally out of a job or an activity, which provides a human being the means of giving basic necessities like housing, finance etc.

During the 2009 recession, the unemployment rate in the entire globe had reach to new highs as stock markets hit a nosedive in the economy. The most effected areas, which resulted with huge downturn, is the European Union (Spain, Austria, Netherlands, Greece etc). Here are the different theories of unemployment and the theory, which matches the current unemployment scenario of the European Union (Active, 2014) (Andreou, 2014). Theories of unemployment Many Economists have devised various theories concerning unemployment.
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There the no firing laws indicated by the government to the companies but the companies won’t be able to hire any employee, as it will turn out expensive for an organization. These criteria’s explains the creation of normal unemployment or classical (Filc and Köhler, 1999).

Cyclical or Keynesian unemployment- this theory occurs when there is not enough demand in the market or economy, which will in turn not generate jobs sufficient jobs to eradicate unemployment. This means less demand creates less income in the organizations, which will reduce the production and in result create huge unemployment. The title was created to explain the recurrent shifts in the business rotation, but sometimes the unemployment can be throughout many years, which included the great depression (Diamond, 2013).

This theory states that the number of employees is higher than the number of jobs vacant. Sometimes even if the jobs are occupied, there will always be some employee still remaining jobless. This could very well be on the economy recovering, but still some are unemployed like the situation after 2008-2009 financial breakdowns (Diamond, 2013). Structural unemployment- happens after a company, or a job market is incapable towards providing jobs for various employees who desire the ability to work because there is a difference among the abilities of the jobless workforces and abilities required for the existing jobs. Structural unemployment might furthermore remain

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