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Macroeconomic Performance - PDF

   

Added on  2021-05-27

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Running Head: ECONOMIC ASSIGNMENT Economic AssignmentName of the StudentName of the UniversityCourse ID

ECONOMIC ASSIGNMENT 1Introduction Labor market performance is one of the key indicators of macroeconomic performance ofa nation. The state of labor marker is reflected from the trend in unemployment rate. Presence ofunemployment is one of the major causes of concern for all nations. Unemployment is evalautedat all the stages of development in an economy. Unemployment comes with the consequence ofpoverty. Higher the rate of unemployment, more is the problem of poverty and misery. Theunemployed people stuck in the vicious circle of poverty. The incidence of unemplyment andpoverty hampers the prospect of growth and development of the nation. Persistentunemployment distracts people from their mainstream life (Agénor and Montiel 2015). Theproblen of unemployment and poverty are prpetuated across generation. Several factors results inunemployment in an economy. Some of these problem can be countered with the use of suitablepolicy tool while others cannot. If the size of labor force increases at a higher rate than the rate ofnew jobs created then there exist the problem of unemployment. Sudden shocks in the economy,change in industry structure and skill mismatch are some other factors result in significantunemployment in a nation.In past few year, Austalia has experienced some changes in its economic structure.Technological inovation has brought changes in production structure. In a globally integratedworld, the nation is facing competition with countries enjoying advantages of a low wage. Theeconomic changes comes along with changes in income and consumption pattern. With achange in skill requirement in line with production technology some workers have beomeunemployed due to lack of peoper skills (Kriesler and Nevile 2016). The rising unemploymenthas become a concern in the path of rapid economic growth. Government in Asustralia however

ECONOMIC ASSIGNMENT 2designes different schemes to promote employment opportunities and maintain rate ofunemployment as low as possible.Unemployment in Australia Cyclical, structural and frictional are some of the common form of unemployment.Structural and frictional unemplyment fall under the category of economy’s natural rate ofunemployment. The natural rate of unemployment indicates the rate of unemployment that isalways in existence in an economy. Cyclical unemployment relates with fluctuation in businesscycle. Rate of unemployment varies with stages of business cycle. In times of economicexpansion, output expands leading to new job opportunities and hence a lower rate ofunemplyment. During recession on the other hand the economy contracts (Kennedy and Prag2017). This leads to job losses and hence a higher rate of unemployment. In the process ofdevelopment, different industries undergo some changes. The changes most often come alongwith changes in skill requirement. Unemployment caused by structural mismatch is termed asstructural unemployment. Frictional unemployment is one that exists in the period of transitionfrom one industry to another. If problem of unemployment persists for a long period of time (sixmonths or more) then unemployment is viewed as a long term phenomenon. In Ausralia unemployment exists for various reasons. Rate of unemployment in 2011 wasrecorded as 5.75 pecent (Scott 2015). The unemployment in Australia is mostly resulted fromstructural mismatch and business cycle contraction. Mining sector is one important contributorfor Australian economy. As the sector employs a number of people expansion and contraction ofthe single sector has significant influence for the rate of unemployment. The mining sector hasfaced a period of contraction in the last few years. The decline in investment in the sector alongwith gloomy propects of mining projects results in a decline in labor demand. The excess supply

ECONOMIC ASSIGNMENT 3of labor leads to unemployment in the economy. This type of unemployment has beome morerelevant for male members of labor force being engaged in the mining sector by a largerproportion. Frictional unemployment is Australia has resulted from transition of workers fromone industry to another. Recently, the economy of Australia has come under severe pressure ofyouth unemployment and long term unemployment (Gregory and Smith 2016). People inAustralia are unemployed for a period between 4 and 52 weeks. In the unemployment trend,cyclical fluctuation plays an important role.Figure 1: Unemployment trend in last five years (Source: tradingeconomics.com 2018) In the last five years the unemployment trend in Australa has experienced a dramaticfluctuation. For the yeat 2013, unemployment had accounted a modest decrease by 0.1 percent.In the third quarter of 2013, unemployment stood at 5.6%. Statistics show that number ofunemployed people decreased by 14,700 and become 697,100. The labor force participation ratehowever accounted a slight decline by 0.1 percentage point. With this, the seasonally adjustedlabor force particiaption rate became 64.9% (jobs.gov.au 2018). Associated with this the nuber

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