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Looking for work

This is a photograph of people at a job fair.
Job fairs and job centers are often available to help match people to jobs. This fair took place in the U.S. (Hawaii), a high-income country with policies to keep unemployment levels in check. Unemployment is an issue that has different causes in different countries, and is especially severe in the low- and middle-income economies around the world. (Credit: modification of work by Daniel Ramirez/Flickr Creative Commons)

Youth unemployment: three cases

Chad Harding, a young man from Cape Town, South Africa, completed school having done well on his exams. He had high hopes for the future. Like many young South Africans, however, he had difficulty finding a job. “I was just stuck at home waiting, waiting for something to come up,” he said in a BBC interview in 2012. In South Africa 54.6% of young females and 47.2% of males are unemployed. In fact, the problem is not limited to South Africa. Seventy-three million of the world’s youth aged 15 to 24 are currently unemployed, according to the International Labour Organization.

According to the Wall Street Journal, in India, 60% of the labor force is self-employed, largely because of labor market regulation. A recent World Development Report by The World Bank says that India’s unemployed youth accounted for 9.9% of the youth work force in 2010. In Spain (a far richer country) in the same year, the female/male youth unemployment rate was 39.8% and 43.2% respectively.

Youth unemployment is a significant issue in many parts of the world. However, despite the apparent similarities in rates between South Africa, Spain, and India, macroeconomic policy solutions to decrease youth unemployment in these three countries are different. This chapter will look at macroeconomic policies around the world, specifically those related to reducing unemployment, promoting economic growth, and stable inflation and exchange rates. Then we will look again at the three cases of South Africa, Spain, and India.

Introduction to macroeconomic policy around the world

In this chapter, you will learn about:

  • The Diversity of Countries and Economies across the World
  • Improving Countries’ Standards of Living
  • Causes of Unemployment around the World
  • Causes of Inflation in Various Countries and Regions
  • Balance of Trade Concerns

There are extraordinary differences in the composition and performance of economies across the world. What explains these differences? Are countries motivated by similar goals when it comes to macroeconomic policy? Can we apply the same macroeconomic framework developed in this text to understand the performance of these countries? Let’s take each of these questions in turn.

Explaining differences : Recall from Unemployment that we explained the difference in composition and performance of economies by appealing to an aggregate production function. We argued that the diversity of average incomes across the world was explained by differences in productivity, which in turn were affected by inputs such as capital deepening, human capital, and “technology.” Every economy has its own distinctive economic characteristics, institutions, history, and political realities, which imply that access to these “ingredients” will vary by country and so will economic performance.

For example, South Korea invested heavily in education and technology to increase agricultural productivity in the early 1950s. Some of this investment came from its historical relationship with the United States. As a result of these and many other institutions, its economy has managed to converge to the levels of income in leading economies like Japan and the United States.

Similar goals and frameworks : Many economies that have performed well in terms of per capita income have—for better or worse—been motivated by a similar goal: to maintain the quality of life of their citizens. Quality of life is a broad term, but as you can imagine it includes but is not limited to such things as low level of unemployment, price stability (low levels of inflation), and the ability to trade. These seem to be universal macroeconomic goals as discussed in The Macroeconomic Perspective . No country would argue against them. To study macroeconomic policy around the world, we begin by comparing standards of living. In keeping with these goals, we also look at indicators such as unemployment, inflation, and the balance of trade policies across countries. Remember that every country has had a diverse set of experiences; therefore although our goals may be similar, each country may well require macroeconomic policies tailored to its circumstances.

For more reading on the topic of youth unemployment, visit this website to read “Generation Jobless” in the Economist .

Questions & Answers

The equation for a demand curve is P = 48 – 3Q. What is the elasticity in moving from a quantity of 5 to a quantity of 6?
Abdul Reply
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Abdel
Difference between demand and supply
Amuzu Reply
The quantity that is demanded will be the amount of that product that people are willing to purchase at a certain price; the relationship between quantity demanded and the price is called the demand relationship. Whereas, Supply does represent how much the whole market can offer a certain product or
Rahul
What is resource maintenance
Linda Reply
it is the optimum and continous supply of resources to undertake a task whether manufacturing or service.
Sajad
RM emphasizes a team approach to human error reduction using principles that seek to improve communications, situational awareness, problem solving, decision making, and teamwork by making the availability of facilities,of funding , personnel, spare parts , technical data, test equipments, and tools
Deep
why economics is a social science
Madag Reply
Economics is generally regarded as a social science, which revolves around the relationships between individuals and societies
Rahul
what is planned demand and actual demand?
Jincy
The terms demand planning and demand forecasting are often used interchangeably. Though they are unmistakably linked in the supply chain management process, they are not the same thing. ... Demand planning is a process; accurate forecasts are the results of an effective demand planning process
Rahul
economics projection on how the cost of living , the facilities that can be enhanced or acquired can be utilised and maintained best. How change in demand and supply effect actual social strata and economic earning. the science in economics is the allied application to make society a welfare state
Srikumar
what is repo rate ?
Ankit
Demand planning and sales forecasting is one of the key aspects of manufacturing operations. This is because manufacturing operations need to accurately estimate demand in order to produce the correct amount of goods within a given time
Deep
what is opportunity cost
Linda Reply
opportunity cost, or alternative cost, is the loss of potential gain from other alternatives when one particular alternative is chosen over the others. In simple terms, opportunity cost is the loss of the benefit that could have been enjoyed had a given choice not been made. 
Rahul
when the difference in output to input is either >1 or enhancement of resources are done to rationalise utility we forego a process to maximize on next best opportunity which will be effective change in cost than can be overcome or foregone to get the best result
Srikumar
Thank you
Linda
what is quantity demanded
Oke Reply
Quantity demanded is the quantity of a commodity that people are willing to buy at a particular price at a particular point of time.
Tendai
ok
Duy
what is rational behavior
Kpienta Reply
This is a part of decision making practice wherein an individual/company exercises sensible choice making, which provides him with the optimum amount of benefit.
Sajad
consumer is said to be rational if he or she buys goods which gives maximum satisfaction at a lower price
Duk
defination of perfect Competition
Fatima Reply
is a type of market form in which their are many companies that sell the same products and service
Modou
current economic plans (MDGS) needs
Ajijola Reply
I don't know what is happening
surajkumar
What is economic
Joeali Reply
What is the importance of study economics
Wilma
Economic is the study of how humans make decisions in face of sacristy
Wilma
economics is the study of how humans makes decision in the face of scarcity
Kpienta
economics is the study of human behaviour when faced with difficult situation example when goods and services are scarcity.
Sydney
Economic is the study of human behaviour
Chibuzo
what is Economic
Dauda Reply
what is 4ps of economic?
thomas Reply
production place Price product
Benedict
Criticism of elasticity
Siddikur Reply
what is unemployment
Gyamfi Reply
ohk thanks
Gyamfi
why is unemployment rapid in the country
Gyamfi
I need more explanation
Odo
1st-due to poorly government planning on employment opportunities, 2nd-low level of science and technology can leads to unemployment,3rd education level
Isack
fiscal monitory policy
Abubakar
thi can be said to be,the level of joblessness in an economy.
Omar
I mean "this "
Omar
what is unemployment
Munanag Reply
not working
Bethel
some one who is willing qualified to work but can't find job
jackie
Bethel...explain? please
Abubakar
some one who is willing to work but can't find job
Hawa
Yes true
Brian
which one please
Hawa
unemployment refers to the ability for someone who is capable and willing to work but could not find a job..
Mnoko
some one who not able to find a job
Dennis
please what is the secret of learning?
thomas

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Source:  OpenStax, Principles of economics. OpenStax CNX. Sep 19, 2014 Download for free at http://legacy.cnx.org/content/col11613/1.11
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