Question

what market segmentation theory says about unemployment and inflation? explain in Australia firm

Answer 1

Labor market work could be better appreciated with the idea of segmentation theory. Workers occupying the spatial location need not be able to compete with one another in the labor market and thus, segmentation geographic coherence problematic needs to be made explicit in geographical research.

Mostly, structural unemployment exists in Australia. Causes of structural unemployment in Australia:

· Decline in industry size: Because of decline in industry size, people lose their job and didn’t get any other job.

· Lack of skills: lacking of skills as per required by the market situation is also one of the major factor contributing to structural unemployment.

· Technological enhancements: Due to growing technological enhancements and lack of skills, people are losing their job very often.

Example: a decline trend is seen in people employed in manual jobs because of automation.

In general, Philips curve shows negative relationship between inflation and unemployment. Since, unemployment is higher in Australia, so inflation will be lower. This is best illustrated in the diagram.

In the diagram, with increase in unemployment from U to U’, inflation decreases from i to i’.