Evaluate the policies available to a government that wishes to reduce unemployment rate

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Evaluate the policies available to a government that wishes to reduce its unemployment rate

In a country, governments face many problems caused by the nationwide growing rate of unemployment, there are several ways to deal with unemployment, but first this depends on what type of unemployment the country is facing. There are two main categories of unemployment- equilibrium and disequilibrium. Disequilibrium unemployment occurs when there are any conditions that prevent the labour market from clearing. There are two kinds of disequilibrium unemployment- classical unemployment and demand-deficient. Equilibrium unemployment occurs when the labour market is in equilibrium, but unemployment still exists in the form of people that are unwilling or unable to take jobs that are available. These are frictional, seasonal and structural unemployment. In this essay, I will focus on structural unemployment as it is the worst type of equilibrium unemployment that can occur. I will assess the solutions of structural unemployment that the government can employ.

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Structural unemployment occurs when there is a permanent fall in demand for a particular type of labour. For example, when workers are mismatched for skills for the job or their geographic area limits where they want to work- if a mining site disappears, the coal miner will not be able to work in the neighbourhood bakery instead as he does not have the skills required for baking. This type of unemployment is called structural unemployment because the structure of the job is unsuited for the skills offered by the worker. Structural unemployment is especially harmful as it tends to result ...

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