Unemployment and its Causes

This article discusses the concept of unemployment, its causes, and the impact on individuals and society. It explores the unemployment rate in the United States and the gender gap in unemployment.

Running head: UNEMPLOYMENT
Unemployment
4/6/2019

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Table of Contents
Introduction................................................................................................................................2
Causes of Unemployment......................................................................................................2
Unemployment Rate in the last 10 years................................................................................5
Unemployment rates by gender.............................................................................................6
Conclusion................................................................................................................................10
References................................................................................................................................12

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Introduction
Over the years, there have been a number of discussion regarding the link between the
unemployment rate and productivity growth in the emerging, developed, and underdeveloped
economies ever since the beginning of the traditional economists. Government agencies,
policymakers, and economists have conducted a number of debates regarding whether or not
the productivity growth can enhance unemployment (Ditimi & Ifeakachukwu, 2013).
Unemployment is the situation when an individual tries to be employed but is unable to find
the job. Unemployment is mostly utilized as the health measure of the economy. The measure
mostly used to calculate unemployment is the rate of unemployment. The rate of
unemployment is computed with the number of people divided by the number of people
employed. Unemployment is divided into two categories that are voluntary unemployment
and involuntary unemployment. The situation of voluntary unemployment reflects that an
individual has left the work in order to find another job. The time it is involuntary the
individual has been thrown out of the job and must search for another job (Makaringe &
Khobai, 2018).
The connection between the unemployment rate and inflation has been conventionally an
opposite correlation. Though, this relationship is very complicated and is breaking a number
of in the last 45 years.
Causes of Unemployment
The major cause of unemployment is voluntary. It is the situation when a person saves a lot
of money in order to quit the unfulfilling jobs. They live a luxury life until they search for
another job.

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Another cause of unemployment is the situation when a person or worker relocates. They
remain in unemployment until they do not get a good job in the town.
Advancement in the technology also results in unemployment which is also called structural
unemployment.
Cause of unemployment is the less number of jobs in comparison to a number of available
applicants (Aurangzeb & Asif, 2013).
The recession has a domino influence, where augmented unemployment results in less
development and a decline in customer expenditures, influencing businesses, which lay off
labors because of losses. A recession takes place in the situation when there is more than two
negative GDP consecutive (Amadeo, 2019).
The motive of Okun's law is to identify the statistical relationship between the economy's
growth rate and an unemployment rate of the nation. According to the law, the output is
based on the number of labor utilized in the procedure of production; hence this reflects a
positive connection or relationship between employment and output. Overall employment is
equal to the number of labor minus unemployed; hence there is the negative connection
between output and unemployment (Daly & Hobijn, 2010).
The thumb rule describes the relationship between alterations in the rate of unemployment
and the growth rate of GDP. Okun observed that, due to a continuous increase in the labor
force size and the productivity level, GDP growth close to the growth rate of its potential is
usually essential, in order to hold the rate of unemployment stable. In order to decrease the
rate of unemployment, the economy should develop at above its potential pace (Sanchez,
2012).

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The unemployment rate in the United States reached 3.8% in the year 2019, unaffected in
comparison to the data of the previous month and is in line with the expectations of the
market. The level of unemployed persons has reduced by around 24000 to 6.2 million
whereas employment has fallen by 201000 to 156.7 million (Trading Economics, 2019).
Besides this, the rate of participation has also decreased to 63% in the month of March with
63.2 rates in the month of February. The average rate of unemployment in the US is 5.76%
from the year 1948 to 2019. The economy has touched an all-time high of around 10.80% in
the year 1982 and the lowest record of 2.50% in 1953 (Trading Economics, 2019).
Source [(Trading Economics, 2019)]

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Unemployment Rate in the last 10 years
Source [(US Bureau of Labor Statistics, 2019)]
The above data highlighting the rate of unemployment in the United States on yearly basis,
from the above analysis, it could be noticed that the year 2010 was the period when the
United States experienced the highest level of Unemployment rate in last 10 years. The
reason behind the increasing unemployment rate in the United States is due to the U.S
housing bubble burst and Wall Street experienced failures dissimilar to those experienced in
the 1920 and 1930 the time period of great recession. The significances of extensive and

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lasting unemployment are terrible not for the total economy of the country, which mislays a
noteworthy share of customer expenditure, the key growth driver, and for the unemployed
individuals. Long-standing unemployment can be psychologically, emotionally, and
financially destructive (Debt. Org., 2019).
The job support in determining the position of an individual in the society and creative work
has been considered as the major elements required for living a happy life. Insistent
unemployment can result in depression, suicide, marital conflict, and illness. Also, if a person
is capable to pay the bills, fulfill the desires of the family and contribute to the development
of the society are key aspects in preserving cultural comfort and public individuality.

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Unemployment rates by gender
Source [(United States Department of Labor, 2019)]
The most observed developments in the labor market in the post-war period of the United
States are the increasing participation of the female labor force, determined through the
married women behavior. The participation rate of the female stabilized at 60% in the 1990s.
By difference, the participation rate of the male labor force progressively weakened in the
period of post-war. After 2009, the participation rate of male and female decreased at the

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same percent until the year 2015. The intense increase in the participation of female and the
prominent decrease in the participation of male have attained substantial devotion in the
different literature. The flattening participation of the female labor from 1990 is very
mystifying, however, a new investigation has offered corresponding justifications (Albansi &
Sahin, 2018).
Source [(Albansi & Sahin, 2018)]
The increasing rate of labor participation is generally considered to be linked with the
increase in the rate of unemployment since labor force applicants should find a job. While a
provisional increase in the participation may be linked with the increase in the rate of
unemployment in the short-term, it is not so clear why the rate of unemployment must
increase in reaction to a drift rise in the participation. If the level of participation increases
because of rising in the attachment of the labor force, workforces do not like to take entry in
the unemployment quota and subsequently, the rate of unemployment may fall. The opposite

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would grasp for a trend decrease in the rate of participation of the labor (Albansi & Sahin,
2018). The substantial alterations in the participation behavior of men and women in the
period of post-war, offer idyllic scenery to inspect the relationship between unemployment
and participation of the labor force over a long horizon.

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Source [(Albansi & Sahin, 2018)]
Considering the data of the U.S, the unemployment gap of gender determined as the
difference between the unemployment rate of male and female. The difference was positive
in 1983; however, the gap inclined to close in the time duration of high unemployment. After
the 1980s, the gap of gender unemployment almost vanished, excluding the time period of
recessions, when the situation of the unemployment among men classically surpasses in
comparison to the women. This singularity was mainly marked in the time period of 2007 to
2009 which is also called the time of the Great Recession (Albansi & Sahin, 2018). This
outline is reliable with an adverse relationship between the rate of unemployment and the
participation of the labor force.
Compositional alterations are significantly essential during this period since the level of
women education increased in comparison to men and the labor force women age augmented
because of the increase in their tenure of employment. In addition to this, there are substantial

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alterations in the industry and work-related distribution by sex, however, these are steadily
decreasing from last four decades. It has been recognized that these aspects or factors have
just limited influence on the growth of the unemployment gap in the gender, signifying that
compositional variations are not just the major element of the junction of the rate of
unemployment by gender.
Conclusion
The above paper has highlighted the concept of unemployment and its causes. The paper has
clarified the impact of unemployment on an individual as well as society. From the above
analysis, it has been recognized that the long-term unemployment can result in illness,
conflicts in personal life, falling societal status, and increasing incapability to pay off bills
and meeting the family demands. Unemployment is the situation when an individual tries to
be employed but is unable to find the job. The unemployment rate in the United States
reached 3.8% in the year 2019, unaffected in comparison to the data of the previous month
and is in line with the expectations of the market. The key motive of the paper is to discuss
the unemployment rate by genders. From the analysis, the rate of unemployment among
women is increasing due to increasing education and working life.

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References
Albansi, S., & Sahin, A. (2018). The gender unemployment gap. Retrieved from
https://voxeu.org/article/gender-unemployment-gap
Amadeo, K. (2019). Seven Causes of Unemployment. Retrieved from
https://www.thebalance.com/causes-of-unemployment-7-main-reasons-3305596
Aurangzeb, D., & Asif, K. (2013). Factors Effecting Unemployment: A Cross Country
Analysis. International Journal of Academic Research in Business and Social
Sciences, 3(1), 219-230.
Daly, M., & Hobijn, B. (2010). Okun’s Law and the Unemployment Surprise of 2009.
Retrieved from https://www.frbsf.org/economic-research/files/el2010-07.pdf
Debt Org. (2019). U.S. Unemployment. Retrieved from
https://www.debt.org/jobs/unemployment/united-states/
Ditimi, A., & Ifeakachukwu, N. P. (2013). The Impact Of Unemployment Rate On
Productivity Growth In Nigeria: An Error Correction Modeling Approach.
International Journal of Economics and Management Sciences, 2(8), 1-13.
Makaringe, S.C., & Khobai, H. (2018). The effect of unemployment on economic growth in
South Africa (1994-2016). Retrieved from
https://mpra.ub.uni-muenchen.de/85305/1/MPRA_paper_85305.pdf
Sanchez, J.M. (2012). The Relationships Among Changes in GDP, Employment, and
Unemployment: This Time, It’s Different. Retrieved from
https://research.stlouisfed.org/publications/economic-synopses/2012/05/18/the-

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relationships-among-changes-in-gdp-employment-and-unemployment-this-time-its-
different/
Trading Economics. (2019). United States Unemployment Rate. Retrieved from
https://tradingeconomics.com/united-states/unemployment-rate
United States Department of Labor. (2019). Labor Force Statistics from the Current
Population Survey. Retrieved from https://www.bls.gov/web/empsit/cpseea10.htm
US Bureau of Labor Statistics. (2019). US Unemployment Rate by Year. Retrieved from
https://www.multpl.com/unemployment/table/by-year