Governments throughout the world are faced with the problem of unemployment. Consider the following newspaper headlines:
· Unemployment benefits cut
· Government introduces new training schemes for the long-term unemployed
· Incentives for young people to stay at school
· Minimum wage to be abolished
· Government to reduce taxes/charges on business
· Government to introduce work-for-the-dole scheme (i.e. recipients of unemployment benefits would have to do some type of work in the community to receive their benefits)
· Government announces massive public works program (e.g. provision of employment by the creation of predominantly public goods at a prescribed wage)
· Job subsidies to be paid to businesses who provide 12 months work for the long-term unemployed
· Government to lower interest rates
For each headline:
a) Explain how the strategy may affect unemployment, including what type of unemployment will be influenced.
b) Examine the effect of each strategy on the level of government spending (in some cases there will be no effect).
What specific measures can be used to target the five types of unemployment?
How could these policies conflict with the governments other macroeconomic goals?
IB Essay practice
a) Explain the various costs of unemployment.
b) Evaluate the various policies aimed at reducing unemployment.