MacroEconomic IA -Japanese Unemployment

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According to the Ministry of Internal Affairs and Communications,Japanese unemployment rate fell to 3.1% last month.It has been the lowest level since 1991. Unemployment defined as the people of working age are actively looking for a job, but who is not employed. As the Japanese labour market is tightening, there are still some unemployed people.

The total labour force (LF) is greater than the aggregate supply of labour(ASL).There are jobs available, but people are either unwilling or unable to take the job. At W, a people are willing to take the job,thus unemployment exists at a-b. Those people could be lack of skills on the job, or the wages are low and unwilling to work.

Although the unemployment rate performance good, the article mentioned that there are still hidden unemployment problems in the calculation. Many people have part-time work, but really like to be working full time.They might not earn as much as they would like, but have to stay in part-time job as it is better than no job. The old Japanese people are lack of confidence in Japan’s Economy,and they go out and looking for a job, but they might only get part-time jobs as they have some difficulties to get a job as their high age. Japanese firms prefer part-time workers as well due the low wages and less payment for the their insurance.
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The still abundance of labour market slack condition are as a result of the aging demographic. The supply of the labour force decrease as the labour is retired.

The aggregate demand decrease in Japan as the consumer confidence decrease and the purchasing power shrink. This cause deflation and Japan has been suffering from it for a long time.

The data released last week showed Japan's core CPI fell by 0.5%. The aggregate demand decrease and shift to the left from AD to AD’, in case the average price level drop down from P to P’ ...

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