Question

1) explain the relationship between the share of workers under the age of 25 and the rise in involuntary unemployment.

2) why does it matter whether involuntary part time employment is caused by the business cycle or by structural influences?

Answer 1

1) The relationship between the share of workers under the age of 25 and the rise in involuntary unemployment could be explained with the help of various factors. The first variable responsible for a positive relation between the two could be requirement of skilled professionals. Since, this age group mainly involves people who have just completed college or are still studying. Majority of them lack professional experience and hence, this could lower the demand of the industry for people under age of 25. This relationship could also be there due to low aggregate demand in the economy. A lower AD will imply that the firms will be reluctant to hire new workers. Also, considering that the current scenario of major economies which depicts that the people falling in young age group are far more than the older people, there arises a situation of lower demand as compared to supply thus leading to involuntary unemploement.

2) It matters if the involuntary part time employement is caused by the business cycle or by structural influences if we take into consideration the long term and the short term view. Involuntary part time employment caused due to a slumply business cycle will mean that the situation could be reversed as the economy recovers which does not pose any long term threat. Whereas, a situation where the involuntary part time employment is caused due to structural influences could be a long term problem. This is because, is this situation does not change over time it could become a trend to hire workers on a temporary basis thus, giving away to the build up of gig economy.