Smoking prevalence in Australia and types of unemployment

This article discusses the smoking prevalence in Australia and India, the effects of cigarette tax on household income and revenue, and the types of unemployment such as structural, cyclical, frictional, and underemployment. It also explains the labour market outcome for younger people and the differences in unemployment rates between India and Austria.

Running head: ECONOMICS 1
Economics
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Smoking prevalence in Australia
In Australia, one in seven 14 % of the population at the age of 15 and above uses tobacco
products Davidson & Silva (2018). Former smokers account for 30% of the population whereas
more than 200,000 smoke sporadically, and 55% are non-smokers. The rate of smoking among
men and women increases with age and the highest ages are 25 and 44. There was a decrease in
smoking rate by 36% Australia by the year 2001.The decrease in smoking rate is due to people
quittting the use of tobacco products and other people not starting to smoke.
In India, 30% of the adult males smoke (W.H.O). Approximately 24% of the children
below the age of 16 have used tobacco in the past years, and 14% of them are still using it. There
was an increase in smoking rate between the year 1998 and 2015. Over 1 billion people smoke
cigarettes globally, men account for 800 million which leaves the 200 million as women. In as
much as smoking rates have declined in first world countries especially among men, tobacco
consumption in third world and developing countries is on the rise.
When the demand for
a cigarette is less elastic, and
the government imposes a $3
tax on cigarettes, the $3 will
shift the marginal cost curve
s=mc upwards from s2 to s1.
The price per packet will
increase and the quantity demanded will decrease. The producers will incur the additional cost of

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$3 tax which they must pay to the government. When the demand for cigarettes is elastic, the tax
burden on consumers will decrease while that of producers will increase since the quantity
supplied will be sensitive to price.
Increase in cigarette tax will reduce the household income, as people will take more
money to spend and buy a pack of cigarettes, and it will increase the revenue from both the
buyers and producers due to the tax imposed. A decrease in cigarette tax will increase the
disposable income, this is because people will earn more money. The revenue from buyers and
sellers will decline.
The Austrian government wishes to reduce the rate of smoking due to the economic costs
used in healthcare to treat tobacco users in case of a complication also there is productivity loss
through lost working days while one is in the hospital. Some users die while there are so young
and this leads to a loss of earnings. However, the decline in the tobacco industry will lead to

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government tax losses and unemployment to those people who used to work in the tobacco
industry. A smoker as they age should stop smoking because the body becomes weak with age
and prone to many health complications like lung diseases.
In 2012, Austrian government aimed to reduce the country’s smoking rate by enacting a
plain cigarette packaging policy. This policy requires that all the branding that is colored logos
and trademarks are removed. The packaging should also have health restrictions when one uses
tobacco. These policies reduce the consumers’ tobacco demand. Lastly to minimize the chances
of the retail packaging is misleading buyers about the detrimental effects due to the usage of
tobacco products (Clarke & Prentice 2012).
Clarke and Prentice concluded that the plain packaging has a quite small effect reducing
the demand for smoking. Also, it is less likely to be active in older smokers because they will be
resistant to the existing anti-smoking policy messages. The addictive nature of tobacco leads to
the ineffectiveness of the plain packaging policy. People’s taste and preferences did not change
after the plain packaging policy (Clarke & Prentice 2012).
Types of unemployment and their causes.
Structural unemployment is the mismatch between the skills that one has and the job
available. There are two causes of this unemployment; technological advances , technology
replaces human labour e.g robots and use of web-based advertising in newspaper industry,
second, trade restrictions in a country, this forces many businesses to relocate leaving behind
their employees (Wagner 2014).

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A decrease in consumer demand for goods and services causes a decline in business
revenue thus recession in the business phase leading to layoffs since there’s no cash to pay the
employees. This is called cyclical unemployment.
When workers leave a job before finding a new one, it’s called frictional unemployment,
whereashidden unemploymentis where people are unemployed but they are not considered when
the government is compiling work statistics
Failure to use all the skills and education by the workers is referred to as
underemployment and is divided into; visible which includes employees working less hours than
is required and invisible which includes workers who work full time jobs but don’t utilize all the
specialized skills (Layard, et al., 2005).

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Labour market outcome for younger people
Most employers like youths aged 15 – 24 since they are fresh from school and thus
aggressive thus hungry to make impact and therefore they exploit and underpay them.
The aggresiveness of the young people aged 15 – 24 years has increased their demand in
the job market. Increase in the number of working-age migrants will shift the labour supply
curve downwards from( so to s1), and the equilibrium wage rate will fall.
The hunger for education has led to the rise in the number of young people between ages
15 – 24 years preferring to work while they study thus triggering an increase in working part-
time as opposed to working fulltime.. Unemployed youth rate in Austria has risen to 13.5% and
underemployment to 18% over the last years. The rise of the young population in Austria has
resulted to higher demand for jobs than the supply of the jobs (Bell & Blanch 2011). Overseas

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migration has also significantly increased over the past years, and this accounts for the increase
in the number of young people in the labour market. India’s unemployment rate increased to 3.52
percent in 2017 from 3.51 in 2016. Globally, unemployment rate is at 30%, both the
unemployment rate and underemployment rate in third world countries is between 4%-12% in
developed countries (Layard, et al., 2005).
The differences in the unemployment rate between India and Austria is because India has
a large informal sector and agriculture plays a significant role in most of the European countries.
Also, the India youth unemployment is higher than that of adults.
References
Davidson, S., & de Silva, A. (2018). Did Recent Tobacco Reforms Change the Cigarette
Market? Economic Papers: A journal of applied economics and policy, 37(1), 55-74.
Bell, D. N., & Blanch flower, D. G. (2011). Young people and the Great Recession. Oxford
Review of Economic Policy, 27(2), 241-267.
Wagner, B. (2014). Types of Unemployment. Montana Department Of Labour And Industry,
Research And Analysis Bureau.
Clarke, H., & Prentice, D. (2012). Will plain packaging reduce cigarette
consumption?. Economic Papers: A journal of applied economics and policy, 31(3), 303-
317.

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Layard, P. R. G., Layard, R., Nickell, S. J., & Jackman, R. (2005). Unemployment:
macroeconomic performance and the labour market. Oxford University Press on
Demand.