...large spatial disparities in unemployment within national economies is a central issue in regional economics. Explanations that exist within the literature for why regional unemployment disparities have been so much more persistent over time in the EU than in the US can be broadly separated to the hysteresis and equilibrium arguments. Before illustrating the analysis and strength of these arguments it is important to ascertain the scale of persistent unemployment disparities across EU regions and U.S states, and why this may be a cause for concern. Regional disparities in unemployment rates are dramatically significant in Europe. In 2001, the average unemployment rate in the EU was 7.8%, but it ranged from 1.7% in Berkshire (UK) to 24.9% in Calabria (Italy).[1] These disparities are present even within single countries, where the range of unemployment rates is much higher than in the US. Disparities in European regional unemployment rates are also extremely persistent. In the US the correlation between regional unemployment rates between 1997-2004 is only 0.3, indicating that over two-thirds of any regional unemployment problem is solved over that period. In Europe, however, the correlation averages 0.83, suggesting that very little adjustment takes place. (Figure 1 in Appendix)[2] This is not a recent phenomena but persistence appears to have been the main feature of behaviour of regional unemployment disparities in European regions...
Words: 2077 - Pages: 9
...Definitions of Economics - Economics is the study of how people, firms and societies choose to allocate their scare resources to satisfy some of their unlimited wants. Definitions of Unemployment - Unemployment in a country is measured by the unemployment rate. It rises during a period of recession and falls during a period of expansion. Definition of inflation - Inflation is defined as the persistent and sustained increase in the price level of goods and services in the economy Definition of Gross Domestic Product (GDP) - GDP considers only the value of final output. Avoid the problem of double counting. To avoid double counting, we sum up only the value added of each industry (Total output = Total expenditure = Total income). - Real GDP Formula: Nominal GDP/GDP deflator x 100 - GDP Deflator: Nominal GDP/Real GDP x 100 Definition of Expenditure/Income approach - The expenditure approach measures GDP by adding the total spending on goods and services by different groups in the economy. (Expenditure). The income approach measures GDP by adding the total income generated from the production of goods and services in the economy. (Income) Definition of Nominal GDP - Or simply called GDP is the value of the current period’s production measure at current period prices. Definition of Real GDP - Real GDP is the value of the current period’s production measured at the constant prices of a selected base year. ...
Words: 999 - Pages: 4
...Introductions International trade refers to a country trade goods and services to another country. International trade opens up the world potential market to increase producer sales quantity and increase competition on foreign country. Apart from these, international trade will create job opportunity and hence reduced unemployment rate as well as positive balance of payment. however, it might bring some negative effects to a country as well, therefore, government play an important role in implementing trade restriction on imported goods in order to prevent imported goods jeopardize the domestic market or at certain extend, monopolizing the market. 94 words A ) Discuss the forms of restriction on international trade. There are quite a number of trade restrictions that government can implement on imported goods in order to protect domestic industry, such as tariffs, quotas, embargo, safety standards regulations, Anti Dumpling, complex custom duties, labeling requirements and quality restrictions. Tariff refers to tax placed on foreign goods which raises the price of the imported goods as it (on imported goods that) enters the country. This is the common form of barrier to trade (trade barrier). Through tariff imposed on imported goods, this will lead to an (The impose of tariff on imported goods could) increase in government revenue as well as providing protection on domestic industry. If the government motive is to increase revenue, then tax usually imposes on imports...
Words: 2028 - Pages: 9
...Thesis statement: Research indicates that there is drastic increase of crime rates due to the high levels of unemployment, harsh economic conditions population density. Annotated Bibliography Fougère, D., Kramarz, F., & Pouget, J. (2009). Youth Unemployment and Crime in France. Journal Of The European Economic Association, 7(5), 909-938 Fougère, Kramarz, & Pouget have argued that when there is a large number of youths who are unemployed, the country may have increased criminal activities as most of them are idle and thus, they must find different ways in which they can earn a living to cater for their needs. Additionally, the economic also tends to affect the image of the country in terms of crime. The article seems to have facts that are accurate. This is because the author has presented different examples in order to support his arguments.. This author is a credible source because has a PhD in Economics from Univeriste Paris and he is a Professor at Ensae University. The article supports the statistics in the relation between crime rate rise and unemployment. Edmark, K. (2005). Unemployment and Crime: Is There a Connection?. Scandinavian Journal Of Economics, 107(2), 353-373. The main aim of the above article is to address whether there are any connection between the rate of unemployment and crimes. According to Edmark, lack of job may result in a higher rate of criminal acts. This is due to the fact that most of the people seem to be jobless and thus, they may attempt...
Words: 1537 - Pages: 7
...Inflation and Unemployment?” by Milton Friedman Stanford Graduate School of Business Bulletin 35, Spring 1967, pp. 10-13, 40, 42 © The Board of Overseers of the Leland Stanford Junior University We have been told repeatedly that, if we are to have full employment, the price we must pay is some inflation. On the other hand, we are told that the goal of price stability should be put above the goal of full employment. In a way the view that we must choose between unemployment and inflation, or between price stability and full employment, is something of a modern version of Karl Marx’s view about the reserve army of the unemployed. In his development, Marx believed that capitalism would always need to keep a large reserve army of the unemployed to keep the proletarians in their places. The modern version of that doctrine says that only a reserve army of unemployed will prevent workers and laborers, whether organized in unions or not, from pushing for ever higher wages. The widely expressed argument insists that if you seek to expand aggregate demand through the kind of governmental measures envisaged in the Full Employment Act, if you seek to expand aggregate demand beyond that point at which enough unemployment will keep workers from trying to get ever higher wages, if you try to push it beyond that point, you can reduce unemployment. But, the argument goes, the reduction of unemployment is possible only by paying the price of inflation. What you must do, the argument continues,...
Words: 2371 - Pages: 10
...Welfare and Unemployment Policies The purpose of this paper is to explore the welfare and unemployment policies. In writing this essay it will identify that the upsurges of welfare and unemployment are delicately intertwined due to policy changes enacted by federal and state legislature. To define welfare it is a term used to describe the assistance received to individuals who are unable to provide for themselves due to living below poverty. This assistance is provided by government agencies (Issitt, 2013). The Welfare Reform Act was meant to get people off of government assistance known as Welfare and introduce them to the work force. There became conditions for people who can obtain benefits; they must work a mandatory of 20 hours after two years of government aid. Welfare Reform provided more funding for the care of children so that mothers can seek out employment (Issitt, 2013). “The idea was to transition people from lives of dependency on welfare to lives of independence in the labor force. As the number of families on welfare declined, federal officials and policy planners wondered if the success of the Wisconsin program could be duplicated at the national level” (Levin-Waldman, 2012). Certain states set limits on the amount of time a family can receive cash assistance from the government, but other types of programs are available through government assistance for example food stamps which now is referred to as The supplemental Nutrition Assistance Program. This program...
Words: 835 - Pages: 4
...from Americans. Illegal immigrants take jobs that most Americans will not do, but many use that fact as evidence that illegal immigrants do take jobs away from Americans. Another argument that many opposers make is that if illegal immigration is downsized, more jobs and higher wages will appear for those with legal status or citizenship in the U.S. Although that may bring a good argument politically, it does not mirror the truth of America’s great work market. America itself is a diverse nation. Almost anywhere you can find any person from any country working wherever because that’s one of the great things about the U.S. No matter if you have legal status or not, you can work almost anywhere. Also, immigrants tend to boost employment effects in the long term. Immigrants rise employment rates, create new jobs, and have a positive impact in America. I agree the article’s argument....
Words: 585 - Pages: 3
...A bid to raise the country's minimum wage has failed. A Private Member's Bill from Labour MP David Clark was defeated 61 votes to 59 at its first reading in Parliament last night. This decision has some reasonable arguments. As we know sharp increase in minimum wage can be effect of increase unemployment in the country,cause an inflation and black market, though increase in minimum wage means increase level of economy in country. Obviously, the main reason that government did not increase minimum wage is a fear of increasing unemployment. It is an reasonable argument, because the demand of work places will increase Q3 (if the minimum wage rate will increase), but not all employers can pay more then equilibrium wage rate(Q2- the amount of employers which would pay new wage rate)and they will reduce the amount of employees, that will be the reason of unemployment. We can see this situation on the graph below. min wage W1 is the equilibrium wage rate in New Zealand, which is now less 13.75, because it is still unemployment, which is 6.9 %. Q3-Q2 - people who lost their jobs. Also sharp increase in minimum wage can cause inflation, because firm's revenue will be less if they will pay more to workers and they will increase their prices to stabilize their revenue. Another disadvantage is that increase in minimum wage can be reason of increasing black market labor, more people work in black market and firms can avoid to pay legal minimum. This will effect New Zealand economy badly...
Words: 506 - Pages: 3
...Problems of Unemployment * Unemployment is a problematic issue that affects the citizens of America, according to the US Department of Labor; unemployment has risen this year to 7.3 %, which is 0.8 points higher than last year. Economists are very sure that unemployment ratio will never be at 0%, however, there is hope that the rates can become much lower. Americans are laid off their jobs daily, reducing households to single income families are even no income. This long-lasting economic effect has knocked on the door of home and affected my family as well as other hardworking citizens. One writer stated, “Too often unemployment affects not only unemployed individuals but also members of their immediate families.”(Aber, 1997). In this essay I will discuss how unemployment has affected my family, how my family is coping with this issue and what positive movements the economy is working on to recover from this problem. What is your thesis? This is a persuasive essay, so I am expecting a point of view. Merely implying is not clear enough. You must be as clear as possible. In January 2013, my husband was laid off from his job with no warning. His supervisor approached him after his shift and was told him that the company was downsizing and his position was no longer needed. The supervisor gave him his last paycheck, and encouraged him to file for unemployment benefits. Unemployment benefits will not...
Words: 953 - Pages: 4
...Objectives for Chapter 18: Fiscal Policy (This is a technical chapter and may require two class periods.) At the end of Chapter 18, you will be able to answer the following: 1. How is the government purchases multiplier calculated? (Review) How is the taxation multiplier calculated? Why is it lower than the government purchases multiplier? How is the transfers multiplier calculated? 2. Given some gaps and marginal propensities to consume, calculate how much government purchases, taxes, or transfers should be changed. 3. Explain why an equal increase (decrease) in government purchases and net taxes (taxes minus transfers) has an expansionary (contractionary) effect. 4. What is the balanced budget multiplier? 5. Explain why discretionary fiscal policy has not been very effective in reducing recessions in the United States. 6. What are the “time lags”? 7. What is meant by "automatic stabilization"? What are the main automatic stabilizers? 8. What is meant by "official budget deficit"? by "structural deficit"? Why is the structural budget deficit a better measure of the intent of fiscal policy? 9. What does it mean that "fiscal policy is expansionary (or contractionary)"? How does one determine whether fiscal policy is expansionary or contractionary? 10. In what ways might budget deficits be bad for an economy? In what ways might they be good for an economy? 11. What...
Words: 9913 - Pages: 40
...minimum hourly wage of 25 cent was inaugurate. Over a century later, Americans are still debating the merits of this fundamental portion of the New Deal. The question is, is it necessary for government to ensure that, low skills worker receive a decent paycheck, or would the economy and low wage earners be better off without government intervention. The logical response is latter, primarily because, the continuity of minimum wage would only raise the unemployment and diminish the employment for low skilled workers. The first argument is, minimum wage will escalate the raise of unemployment rate. –Its basic economics. If the price of labor increase, the demand will plummet. According to James A. Dorn article, Obama Minimum wage hike: A case of zombie economics, “A fundamental law of economics-Law of demand-states that when price of anything increase, the quantity demand will decrease…in the case of labor, this means as the price of labor increase, the number of job will decrease” (Dorn). Dorn statement validates the assertion of unemployment rate escalating while, employment plummet. However, opponents such as President Obama, disregard the law of supply and demand by, proposing to increase the federal minimum wage. During his annual State of Union address, Obama stated, “No who works full-time should have to live in poverty…raise the federal minimum wage to $9. This single step would raise the income of millions of working families” (Obama). Paul Krugman disprove Obama’s assertion...
Words: 578 - Pages: 3
...when making predictions, making cost evaluations, deciding on investments, and wide variety of other functions of accounting and economic activity and interpretation. Nominal GDP can be considered to some as being somewhat useless. However, it can be useful in indirect dialogue of the GDP when discussing ‘general’ terms and ‘general’ numbers. The ‘general’ description of nominal GDP is the figure of GDP unadjusted for inflation. It can be awfully misleading. The misinformed of the ‘current dollar GDP’ will make assumptions based on non-facts. ‘Current dollar GDP’ being another term used to describe nominal GDP. A country’s population that is actively pursuing employment and is currently willing to work would amount to its unemployment rate. It is a percentage of a country’s total labor work-force. Its value can be...
Words: 917 - Pages: 4
...raising the minimum wage to $10.10. The University of Wisconsin-La Crosse was fortunate enough to gather members from the Economics department and discuss this present issue at hand. The Economists were able to present arguments in a non-biased form to us, the students. The argument to raise the minimum wage had both positive and negative points. Raising the minimum wage has positive points. The main goal of raising minimum wage to $10.10 is to raise income for the working poor. Annual earnings for an employee that works 2000 hours a year at the current minimum wage accrues an annual salary of $14,500. By raising the minimum wage to $10.10, the annual salary would rise to $20,200. It can also be noted that when an employee earns more, they tend to work harder. This would push two percent of the population who live in poverty above the poverty line. This can cause an increase in production. Overall, a raise in minimum wage to employ’s would generate improvements to the working poor. Raising the minimum wage; however, brings up economical issues. The first issue being that raising the minimum wage would cause an increase in unemployment. Economic logic supports the idea that elasticities of labor demand would be large for unskilled workers. Also, unemployment will increase due to the fact that companies can outsource jobs for a cheaper rate. The rise in minimum wage will also cause companies to reduce hours to their employees. This means that the effect on earnings would be...
Words: 425 - Pages: 2
...1. A minimum wage of £8 an hour would raise living standards for everyone in the country. How persuasive is this argument? Minimum wage is lowest hourly rate an employer can pay an employee. Currently in UK, the minimum wage for those over 20 years is £6.5 per hour. If it rose to £8, to some extent this has helped raised living standard, as the lowest paid workers have seen an increase of their disposable income. Since the employers saw the benefit, they will then have more incentive to get a job rather than staying at home. However, not everyone can live a better life because of that, only if they are lowest paid worker. A rise in minimum wage may cause unemployment as the diagram shows. It will lead to the real wage unemployment of Q2Q3. Unemployment will damage the welfare of the society. The small amplitude of increase, it cannot really change people’s living standard. While equipping them with skills and knowledge by education can truly help them to be more competitive and thus be better off. In conclusion, this argument is not persuasive enough 2. Educating people in the harmful effects of excessive drinking of alcohol is a waste of taxpayers’ money and higher taxes would be far more effective. Do you agree? Alcohol is a demerit goods that market always overproduces. Excessive drinking of alcohol is associated with negative externalities, for example, like health problems and danger of accidents. Therefore, government needs to help correct it by put tax on...
Words: 386 - Pages: 2
...This article is related to Macroeconomics and concepts are consistent with the course materials. It talks about unemployment, inflation and monetary policy. I found out strengths and weaknesses from the monetary policy that occurred in this article. Different countries concern about different problems within their society whether it is inflation rate or unemployment rate. Emerging markets like China and dominant markets like Japan and Europe conduct tight monetary policy to raise interest rate. In contrast, the Fed (The Federal Reserve Bank) does not conduct tight monetary policy to raise interest rate. The author of this article states that the U.S. acts like an outlier. Some officials like the Hawks, people who pursue an aggressive policy, would like to see the Fed to tighten monetary policy. On the other hand, the Fed has conventional Keynesian perspective over the monetary policy. They are optimistic about inflation but aware of unemployment. So, there is a conflicting argument between the hawks and the Fed leaders. Ben Bernanke, chairman of the Fed, considers inflation’s principal determinants to be gap between aggregate demand and aggregate supply. In contrary, the hawks put less emphasis on the gap between aggregate demand and supply to regulate the inflation rate and more weight on the position of monetary policy. Although, there are arguments between hawks and Keynesian, opinions of Ben Bernanke determine the policy since hawks are not in charge at the...
Words: 1168 - Pages: 5
