Question

Macroeconomics question regarding unemployment Suppose that a new program implemented by the government authority creates 200 new jobs. Do you think that this would decrease unemployment by 200 (same rate as employment created). Write two paragraphs explaining two strong arguments as to whether this is true or not and why.

Answer 1

No creation of 200 new jobs will not decrease unemployment by 200.

This is because the' economically active population'(ie people who are already working, or actively looking for a job and will start working immediately if job is provided ) have a faster growth than growth in the employment rate.The resaon that rise in employment rate has not succeeded in decreasing unemployment rate is that people who benefit from rise  in employment are those who are not in the labour force ie they are outside the labor market.They are old peole as well as immigrants.People above 65 years of age, in work, has increased and accounts for about half of increase in emloyment. Thus only creating more jobs will not solve the unemployment problem.

If more jobs are created,unemployment may increase, decrease or remain unchanged depending  on the number of people who started looking for job in that month. Unemployment among young people ie 16-24n years of age is high and accounts for about 22%. So a lot should be done on the supply side like more education, welfare reforms etc.Workers with a high level of education are in great demand by the firms and can reduce unemployment.