Explain the causes of unemployment and consider which is most likely to occur in a
developing country. [12]
Unemployment is the level of workers in the work force who are not employed, but would
like to work. A developing country is one that is characterised by low levels of real gdp/
capita, high dependency ratios, and weak government sectors.
There are di ering causes of unemployment in an economy. Firstly, cyclical
unemployment is that which arises from a lack of aggregate demand. It usually occurs
during an economic downturn in the business cycle and is generally not a concern to
governments as it is expected to pick up during the economic boom. Frictional
unemployment occurs when workers are between jobs, for example, they are waiting for a
better o er. Again, this is typically not of great concern. However, care shoudl be taken to
provide information on the job markets to decrease it as much as possible. Seasonal
Unemployment occurs when some industries decline during certain periods of the years.
Agriculture is an example, during winter not many workers are needed and thus some are
unemployed. They are expected to be employed again during the high season. Finally,
structural unemployment which is unemployment that arises due to structural issues in an
economy. This is the most concerning unemployment as it needs direct action to
minimise. Structural unemployment could be caused by geographic or occupational
immobility, or technical unemployment, where capital intensive production replaces
workers.
IN a developing country, it is probably that seasonal unemployment would be see as they
tend to be primary sector dependent, for example, agriculture. Frictional unemployment
may also occur especially if there is inadequate information about the labour markets.
Structural unemployment would likely only occur should the economy decide to shift
between production sectors. For example, a developing country may decide to become
more focused on the manufacturing of secondary products. Without proper retraining,
occupational immobility will occur, Further, if there is not adequate transport and
communications infrastructure, there will be geographic immobility. Lastly, if the economy
switches to capital intensive production, technical unemployment will rise.
However, it should be noted that there is a di culty in assessing the level of
unemployment and its types. This could be due to inadequate information, say due to a
big informal economy or a lack of welfare. If the population is mostly rural based, this
could exasperate issues of measuring unemployment due to transport and
communication di culties.
ff ff ffi ffi
developing country. [12]
Unemployment is the level of workers in the work force who are not employed, but would
like to work. A developing country is one that is characterised by low levels of real gdp/
capita, high dependency ratios, and weak government sectors.
There are di ering causes of unemployment in an economy. Firstly, cyclical
unemployment is that which arises from a lack of aggregate demand. It usually occurs
during an economic downturn in the business cycle and is generally not a concern to
governments as it is expected to pick up during the economic boom. Frictional
unemployment occurs when workers are between jobs, for example, they are waiting for a
better o er. Again, this is typically not of great concern. However, care shoudl be taken to
provide information on the job markets to decrease it as much as possible. Seasonal
Unemployment occurs when some industries decline during certain periods of the years.
Agriculture is an example, during winter not many workers are needed and thus some are
unemployed. They are expected to be employed again during the high season. Finally,
structural unemployment which is unemployment that arises due to structural issues in an
economy. This is the most concerning unemployment as it needs direct action to
minimise. Structural unemployment could be caused by geographic or occupational
immobility, or technical unemployment, where capital intensive production replaces
workers.
IN a developing country, it is probably that seasonal unemployment would be see as they
tend to be primary sector dependent, for example, agriculture. Frictional unemployment
may also occur especially if there is inadequate information about the labour markets.
Structural unemployment would likely only occur should the economy decide to shift
between production sectors. For example, a developing country may decide to become
more focused on the manufacturing of secondary products. Without proper retraining,
occupational immobility will occur, Further, if there is not adequate transport and
communications infrastructure, there will be geographic immobility. Lastly, if the economy
switches to capital intensive production, technical unemployment will rise.
However, it should be noted that there is a di culty in assessing the level of
unemployment and its types. This could be due to inadequate information, say due to a
big informal economy or a lack of welfare. If the population is mostly rural based, this
could exasperate issues of measuring unemployment due to transport and
communication di culties.
ff ff ffi ffi
