Question

Why is unemployment a good thing in an economy?

Answer 1

A small level of unemployment is considered good for an economy. Zero rate of unemployment is not good for any economy. Zero rate of unemployment means the economy is overheated and wages are exceptionally high. it might push up inflation rate.

Further scholars have unanimously accepted the fact that 4 -5 % unemployment rate is because of frictional and structural changes. Such changes are considered beneficial for any economy since these unemployments are beneficial for technological development and innovation.

zero unemployment means people are not chasing their dreams, they are satisfied with their existing jobs and the same level of technology is available in the market. Thus, when people look for a new job, the frictional unemployment pops up and when new technology comes to market, the structural unemployment rises Both of these are crucial for economic developments. US economy did never experience zero unemployment. Last, in 1953, the unemployment rate was 2.5 % which was least in the history of unemployment.