In a market economy, the cyclical nature of development is characterized by economic instability, which manifests itself in the growth of unemployment
Unemployment as an economic phenomenon arises as a result of self-regulation of a market economy, covers a certain part of the able-bodied population, temporarily does not have the ability to practice the Law of Ukraine "On employment in the population" dated March 1, 1991, recognizes as unemployed able-bodied citizens of working age for reasons beyond their control, not have earnings or earned income, are registered with the public employment service as job seekers. They are able to work and are ready to work, but this service does not provide proper work, that is, such a workplace, which corresponds to the professional training of a citizen, his length of service and experience, age and transport accessibility.
A citizen of Ukraine receives the status of an unemployed person if he is terminated labor contract due to production changes and he registered with the employment service within the next 10 days. For the first three months, the worker retains the average monthly salary so that he can look for a new job. If the worker has not found this period of proper work, and the employment service has also not offered him anything, he receives the status of unemployed. In Ukraine, unemployment assistance is paid from the eleventh day after the registration of a citizen in the state employment service and, but not more than 12 months over the next three years, and for persons of pre-retirement age - 18 months. The amount of the benefit is guaranteed not less than 50% of the average wage at the previous place of work, but not less than the minimum wage established by law. Citizens who are looking for work for the first time or after a break of more than one year receive benefits in the amount of at least 75% of the minimum wage.
The causes of unemployment can be the following phenomena:
1) the rate of population growth exceeds the rate of production growth (T. Malthus, 18th century);
2) the relative lag of the demand for labor from the rate of capital accumulation, the growth of the technical and organic construction of capital (K. Marx, 19th century);
3) in conditions of imperfect competition in the labor market, there is an increase in prices and a decrease in demand for labor (A. Pigou, 1923);
4) as incomes rise, people tend to increase their consumption, but not to the extent that income grows; the propensity of the population to consume is declining, and to saving is growing (J. Keynes, 1936);
5) cyclical development of the economy at the stage economic crisis, the decline in production leads to a decrease in aggregate demand for goods and services, to a decrease in the level of employment of the able-bodied population;
6) the development of scientific and technological progress predetermines structural shifts in the economy, the emergence of new industries that require skilled workers and more time for professional training and retraining of workers in old industries National economy
7) seasonal changes in production levels reduce the demand for labor in agriculture, construction, etc.;
8) the growth of the population of working age, youth, increases the supply of labor;
9) the economic policy of the government to increase minimum size wages leads to an increase in production costs and a decrease in demand for workers
Specialists classify unemployment according to the reasons for its existence:
1. Frictional unemployment is associated with the constant movement, search or expectation of work by the population as a result of a change of residence, profession, due to the birth of a child and caring for him. Such unemployment is of a natural nature and should not be continued too long.
2 structural unemployment arises under the influence of scientific and technological progress and covers those workers whose labor cannot be used in new jobs and require a certain amount of time for additional training and retraining.
3. Cyclical unemployment is caused by a shortage of demand during an economic crisis, a decline in production and stagnation
4. SEASONAL unemployment refers to workers employed only during certain times of the year
5. Institutional unemployment occurs as a result of the low efficiency of the organizational structures of the labor market, public employment services (lack of information about vacancies, working conditions, etc.).
6. Hidden unemployment exists in the conditions of incomplete use of the enterprise's resources, while employees are forced to work a shorter working day, switch to temporary work or go on additional unpaid leave.
7. Voluntary unemployment is created by individuals who do not want to work and have lost this opportunity and connection with working life for a long time.
8. Natural unemployment constantly takes place in conditions of economic equilibrium between the demand for labor and the supply of jobs. It is equal to the sum of frictional and structural unemployment rates. The level of natural unemployment should not exceed 4-5% of the employed population. Content and meaning natural unemployment in modern conditions, developed countries were identified by representatives of the monetarist model of the labor market - American economists, laureates. Nobel Prize. M. Friedman (1976),. F. Hayek (1974) and i4) and in.
Unemployment as a factor economic instability causes certain negative consequences, which should be taken into account in order to develop an effective system of measures to regulate the development of this phenomenon. The state will take measures to reduce the level of negative consequences of unemployment.
Unemployment generates losses in production. A. Okun discovered the mathematical relationship between the unemployment rate and the volume. GNP: if the actual rate of unemployment exceeds the natural rate by 1%, the gap is wide. GNP is 2-2.55%.
Unemployment reduces consumer demand, savings of the population, investment demand, the number of jobs and significantly reduces the volume of production. The unemployed lose their professional skills to work, which does not negatively affect demand. Unemployment reduces the standard of living of the population, is a factor contributing to the growth of social tension in society, an increase in crime.
The state and the government regulate the level of unemployment, develop programs to ensure effective employment of the able-bodied population, eliminate the reasons for the existence of this phenomenon
For example, the state takes the following measures: limits the birth rate, the level of wages, spending on social needs of the population, the budget deficit, reduces the length of working hours, i.e. uses n policy of part-time employment, increases the discount interest rate; organizes a system of institutions in which workers who are temporarily not working undergo retraining and advanced training, develops programs to combat marginalism and crime, etc.
Unemployment is related to inflation. English economist. O. Philips (50s of the XX century) discovered a non-linear relationship between the dynamics of nominal wages and the unemployment rate: an increase in the unemployment rate is accompanied by a decrease in the inflation rate and vice versa. Awareness of this dependence allows the state to choose a certain economic policy: either increase wages and unemployment or stable prices and wages in the face of stabilization of the unemployment rate.
The dynamics of the unemployment rate in the current conditions of economic development in Ukraine has specific features: firstly, hidden unemployment prevails among the forms of unemployment, secondly, unemployment and the price level are simultaneously rising in the economy, there is a decline in production, that is, stagflation takes place, thirdly, there are shifts in the socio-professional and gender and age structure of the unemployed (professional managers, youth.
Economic instability is also accompanied by inflationary processes
Economic instability: inflation and unemployment
There are almost no countries in the world where there was no inflation in the second half of the 20th century. Inflation and unemployment are considered the most severe phenomena in terms of their socio-economic consequences in market conditions. Their occurrence is inevitably associated with the cyclical nature of the development of the economy, when neither full employment nor a stable price level is achievable.
Causes of inflation
First, the imbalance public spending and income, expressed in the state budget deficit. If this deficit is covered by the emission of money (issuance), the amount of money in circulation grows.
Second, rising military spending is one of the main causes of chronic deficits. state budget and increase public debt, to cover which the state prints new money. Also, military appropriations create additional solvent demand, which leads to an increase in the money supply without an appropriate commodity coverage.
Thirdly, general increase the price level in the country is associated by various schools in modern economic theory and with a change in the structure of the market in the twentieth century. The modern market is a market of imperfect competition. An imperfect competitor has a certain degree of power over price. An imperfect competitor seeks to maintain a high level of prices, for the purpose of which it reduces the production of goods, limits the influx of new producers.
Fourth, with the growth of the “openness” of the economy of a particular country, its ever greater involvement in world economic relations, the danger of “imported” inflation increases. For example, the 1973 energy crisis caused a rise in the price of imported oil. Prices for other goods also rose.
Fifth, inflation becomes self-sustaining as a result of so-called inflationary expectations. Many scientists in Western countries and in our country emphasize this factor, emphasizing that overcoming inflationary expectations of the population and producers is the most important task of anti-inflationary policy.
Sixth, the cause of inflation is the reduction in the real volume of national production. It may be due to rising wages leading to higher production costs, a cyclical downturn in the economy, industrial restructuring, disruption of economic ties, etc.
A reduction in real output with a stable money supply leads to an increase in inflation, as a smaller volume of goods and services is opposed by the same amount of money. However, this reason, in comparison with the first two, does not play a significant role in the inflationary process. So, if in Russia for the 1990s. production decreased by about 2 times, then the rise in the price level during this period amounted to thousands of percent. This means that the main cause of inflation is the growth of the money supply and the velocity of money circulation. It causes so-called demand-pull inflation. The fall in production causes cost-push inflation.
What is the mechanism of influence on the economy of inflationary expectations? The fact is that people, faced with an increase in prices for goods and services for a long period of time and losing hope for their decline, begin to purchase goods in excess of their current needs. At the same time, they demand an increase in nominal wages and thereby push the current demand to expand. Expansion of current demand contributes to higher prices. Savings and credit resources are reduced, which holds back the growth of investment, and, consequently, the supply of goods and services. Economic situation in this case is characterized by a slow increase in aggregate supply and rapid growth aggregate demand. The result is a general increase in prices.
Many causes of inflation are observed in almost all countries. However, the combination of various factors in this process depends on the specific economic conditions. Thus, immediately after World War II, Western Europe inflation was associated with an acute shortage of many goods. In subsequent years, government spending, the price-wage ratio, the transfer of inflation from other countries, and some other factors began to play the main role in unwinding the inflationary process. In the former USSR, along with general patterns, the most important cause of inflation in last years can be considered a unique disproportionality in the economy, which arose as a result of command - administrative system. The Soviet economy is characterized by an excessive share of military spending in GNP, high degree monopolization of production, distribution and monetary credit system, short specific gravity wages and other features.
The well-known economist V. Novozhilov noted that the complexity of the problem of inflation and, at the same time, its Achilles heel is that it is extremely difficult to adjust the amount of money to the amount of goods, and it is not so difficult to produce paper money in the desired amount and, most importantly, it costs practically nothing. . This is a huge temptation for those who have the right to create money. The personal interest of everyone who creates "non-material" money is to create more and more of them; for money there is no limit to saturation, for them there is no limit to overproduction. True, Novozhilov went on, money depreciates in excess, but it is worthless. And if the entire national economy does not benefit from an excess of money, then the issuer receives a very real increase in wealth, the source of which is the damage to those who are far from the issue.
Inflation can also be defined as an imbalance between supply and demand. Based on this, a distinction is made between demand-side inflation and supply-side inflation (or cost-push inflation).
With inflation of demand, the violation of the relationship between supply and demand comes from the side of demand. The main reasons for this may be the expansion of state orders (military and social), an increase in demand for means of production in conditions of full and almost 100% utilization of production capacities, as well as an increase in the purchasing power of workers due to wage growth as a result of the concerted actions of trade unions. As a result, there is an excess of money in circulation in relation to the quantity of goods, and prices rise.
Cost-push inflation refers to an increase in prices due to an increase in production costs. The reasons for the increase in costs may be oligopolistic pricing practices and financial policy states, rising prices for raw materials, the actions of trade unions demanding higher wages.
Since the general increase in prices leads to a decrease in the real incomes of the population, both the demands of trade unions to increase the nominal wages of workers and the state policy of compensating monetary losses from inflation are inevitable. There is a vicious circle, the so-called inflationary spiral: rising prices cause demands for higher incomes of the population. And the growth of wages leads to an increase in the costs of entrepreneurs, and hence the prices of goods.
The concept of unemployment.
Unemployment is defined by the International Labor Organization (ILO) as a contingent of persons over a certain age who are unemployed, currently fit for work and looking for it in the period under review. A person can be considered unemployed only if all three conditions are met. Looking for a job means taking action in this direction. Such actions include registering at the labor exchange, contacting employers, constantly appearing in places where work can be obtained (farms, factories, labor markets), placing advertisements in newspapers or responding to relevant advertisements in the press, etc.
Consider how unemployment is measured.
First, the entire population of the country is divided into two parts.
The first part includes the economically inactive population - residents of the country who are not part of the labor force: a) students and students of daytime educational institutions; b) pensioners (for old age and other reasons); c) persons leading household(including those who care for children, the sick, etc.); d) desperate to find a job; e) persons who do not need to work (regardless of their sources of income).
The second part includes the economically active population - this is the share of the number of economically active people in the total population. This level is calculated by the formula
Economic level active population;
Population;
economically inactive population.
In turn, the economically active population is divided into two groups.
The first group includes employed people - persons aged 16 years and older (as well as persons of younger ages) who: a) worked for wages (on a full or part-time basis); b) worked without pay in family businesses.
The second group includes the unemployed - persons aged 16 and older who: a) did not have a job (profitable occupation); b) searched for a job (applied to employment services, etc.); c) were ready to start work; d) were trained in the direction of the employment service.
Based on data on employment and unemployment, the unemployment rate is determined. Unemployment rate () - the share of the number of unemployed in the economically active population ().
%
When analyzing unemployment, economists are not limited to nominal unemployment rates. Unemployment is never evenly distributed among the population of a country. Some groups of the population suffer from unemployment more than others, and unemployment in all groups without exception is explained by a wide range of reasons.
As statistics show, in developed countries Unemployment is on average slightly higher for women than for men. Significantly greater differences are observed for individual age groups. Thus, unemployment among teenagers (teenagers aged 13 to 19) is almost 3 times higher than among adults. This applies, however, not to all countries. In Germany, for example, the unemployment rate among teenagers is much lower than in the US or the UK, due to a highly developed system vocational training and vocational guidance schools, as well as on-the-job training that minimizes the period of unemployment at the start of a person's working life.
One of the features of Russian unemployment is that it is practically not influenced by the national-ethnic factor, despite the fact that Russia is heterogeneous in terms of the national composition of the population. This cannot be said of many other developed countries, in particular the United States, where the unemployment rate among the colored population is several times higher than among the whites.
Causes of unemployment
Economists explain the causes of unemployment in different ways. market economy. In general, the following approaches to explaining this phenomenon could be singled out: a) population surplus (Malthusianism); b) the growth of the organic composition of capital (Marxism); c) a high level of wages (neoclassics); d) insufficient aggregate demand (Keynesians).
The neoclassical and Keynesian concepts of unemployment are most widely used in Western economic science.
The neoclassical concept of unemployment in the most consistent form was presented by the famous English economist A. Pigou in his book The Theory of Unemployment, published in 1933.
The main provisions of A. Pigou are as follows:
a) the number of workers employed in production is inversely related to the level of wages, i.e., the lower the employment, the higher the wage;
b) existed before the First World War 1914-1918. the balance between the level of wages and the level of employment is due to the fact that wages were established as a result of free competition among workers at a level that ensured almost full employment;
c) the strengthening of the role of trade unions after the First World War and the introduction of a system state insurance from unemployment made wages inflexible, allowing them to be kept at too high a level, which is the cause of mass unemployment;
d) To achieve full employment, a reduction in wages is necessary.
Thus, in the neoclassical model, the market economy is in principle able to use all labor resources, but only under the condition of wage flexibility. Full employment in this case means that everyone who wants to sell a certain amount of labor at the current wage rate can fulfill his desire. Consequently, in the neoclassical model, unemployment is real, but it does not follow from the laws of the market, but arises as a result of their violation, interference in the competitive mechanism of either the state or trade unions, i.e., non-market forces. These forces do not allow wages to fall to the equilibrium level, as a result of which entrepreneurs will not be able to offer work to everyone who wants to work at the required wage rate.
Therefore, according to the neoclassicists, in a market economy there can only be voluntary unemployment, i.e., one that is caused by the requirements of high wages. Workers themselves choose unemployment, because they do not agree to work for lower wages for their labor. The same can be said about the role of the state: if it regulates the level of wages, it violates the competitive market mechanism. Hence the demands of neo-liberal economists - to eliminate unemployment, it is necessary to achieve competition in the labor market, wage flexibility.
However, in the neoclassical model, unemployment can also occur while maintaining wage flexibility, since some part of the labor force will remain unemployed of their own free will, claiming higher wages.
The neoclassical concept of voluntary unemployment, outlined in the above-mentioned book by A. Pigou, became the subject of serious criticism by J. Keynes in his fundamental work "The General Theory of Employment, Interest and Money", written in the hot pursuit of the Great Depression.
In the Keynesian concept of employment, it is consistently and thoroughly proved that in a market economy, unemployment is not voluntary (in its neoclassical sense), but forced. According to Keynes, neoclassical theory is valid only within the sectoral, microeconomic level and, therefore, it is not able to answer the question of what determines the actual level of employment in the economy as a whole. Keynes, on the other hand, showed that the volume of employment is quite definitely related to the volume of effective demand, and the presence of unemployment is due to the limited demand for goods.
Outlining his views, J. Keynes refutes the theory of A. Pigou, shows that unemployment is immanent in a market economy, follows from its laws. In the Keynesian concept, the labor market can be in equilibrium not only with full employment, but also with unemployment. This is due to the fact that the supply of labor, according to Keynes, depends on the value of nominal wages, and not on its real level, as neoclassical thought. Therefore, if prices rise and real wages fall, workers do not refuse to work. The demand for labor presented in the market by entrepreneurs is a function of real wages, which changes with a change in the price level: if prices rise, workers will be able to buy less goods and services, and vice versa. As a result, Keynes comes to the conclusion that the volume of employment to a greater extent depends not on workers, but on entrepreneurs, since the demand for labor is determined not by the price of labor, but by the effective demand for goods and services. If the effective demand in society is insufficient, since it is determined primarily by the marginal propensity to consume, which falls as income rises, then employment reaches an equilibrium level at a point located below the level of full employment.
In addition, the employment of a significant part of the labor force is determined by such a component of total costs as investment. The relationship between employment growth and investment characterizes the employment multiplier equal to the demand multiplier. The growth of investment leads to an increase in primary employment in industries directly related to investment, which in turn affects the industries that produce commodities, and as a result, all this leads to an increase in demand, and hence aggregate employment, the increase of which exceeds an increase in primary employment directly related to additional investment.
Employment, according to Keynes, is a function of the volume of national production (income), the share of consumption and savings in ND. Therefore, to ensure full employment, it is necessary to maintain a certain proportionality between:
a) the cost of creating GDP and its volume;
b) savings and investments.
If the cost of producing GDP is insufficient to ensure full employment, unemployment occurs in society. If they exceed the required size, inflation occurs.
In relation to "savings - investments", if savings more investment, then a strong flow of capital investment, growth in production and supply, on the one hand, and low current demand (due to large savings) on the other, lead to a crisis of overproduction, a fall in demand for labor and unemployment. The excess of investment over savings leads to the fact that productive demand is not satisfied due to a lack of savings. In addition, the flip side of low savings is a high propensity to consume, which ultimately leads to an increase in the price level, i.e. inflation.
The Keynesian concept draws two important conclusions:
a) the flexibility of prices in the commodity and money markets, as well as wages in the labor market, is not a condition for full employment; even if prices fell, this would not lead to a reduction in unemployment, as the neoclassical thought, since when prices fall, the expectations of capital owners regarding future profits fall;
b) in order to increase the level of employment in society, active government intervention is necessary, since market forces are not able to maintain equilibrium at full employment.
Types of unemployment
Economists distinguish mainly three types of unemployment: frictional, structural and cyclical.
Frictional unemployment is generated by the constant movement of the population from one region (city, town) to another, a change in profession, life stages (study, work, childbirth and care for him, etc.). Unemployment arising from these motives is considered as voluntary, since people change their place of residence, work, profession, decide to study or have a child, frictional unemployment always exists, it is inevitable. Its main feature is low duration. For example, in the United States in the late 1980s. about 50% of the unemployed were unemployed for less than 5 weeks, and 80% of the unemployed for about 14 weeks. This suggests that American unemployment is largely frictional in nature, which indicates a fairly high efficiency of the labor market, a normal process of redistribution of resources in the economy, and not a serious social problem. An essential feature of such unemployment is also that people who are looking for a job have the necessary qualifications, vocational training and skills. There is demand from firms for their ability.
Voluntary refusal to work is not limited to frictional unemployment. Voluntary unemployment occurs, as already mentioned, when a person does not want to work for low wages. In addition, in any society there is a certain percentage of people who do not want to work at all (in Western countries, their share in total reaches 15%). This category includes wealthy people who can afford not to work, because they do not need income from labor. This also includes a kind of "innate parasites" (homeless people, clochards, etc.), for whom vagrancy is a kind of lifestyle, a psychological attitude. Some people receive income from other sources (they are dependent on their spouses, the state) and believe that the income they receive does not compensate them for the loss of leisure or non-market activities, including housework and raising children. Finally, the category of voluntary unemployed often includes low-skilled people who cannot count on high wages, as well as workers in countries where taxes are so high that labor income does not bring tangible net profit.
Structural unemployment arises as a result of a mismatch between the demand for labor and the supply of labor associated with technological changes in production, which also give rise to structural changes in the demand for labor. For this reason, structural unemployment is sometimes called technological unemployment. Under the influence of technological changes, the demand for some types of professions stops and employers are looking for specialists with new professions. In addition, there are changes in the territorial distribution of the labor force, as a result of which in some regions there may be no accumulation of employed population. In the 1990s in Russia and other CIS countries, unemployment increased to a large extent due to the structural component, since, on the one hand, the demand for many specialties began to fall sharply (engineers, designers, research workers, etc.), and on the other hand, there was a need for new professions (bank employees, accountants, businessmen, managers, security guards, etc.).
Structural unemployment differs from frictional unemployment in that it has a longer duration. Frictional unemployed, as a rule, have the opportunity to get a job without additional retraining, as demand for their professions remains in the labor market. On the contrary, the structural unemployed sometimes need not only retraining, but also a change of residence.
Frictional and structural unemployment is also called natural unemployment. The concept was introduced into economics by M. Friedman in 1968 and independently developed by another American scientist, E. Phelps.
Natural unemployment characterizes the best reserve of labor for the economy, capable of fairly quickly making intersectoral and interregional movements, depending on the needs of production. Just as a factory needs spare parts in case a machine breaks down, so the economy needs spare, unemployed workers ready to go to work at any moment, as soon as a vacancy arises. Essentially, natural unemployment is the proportion of the unemployed that corresponds to the expedient level of full employment in the economy, i.e. potential GDP.
The concept of full employment does not mean that all people of working age are employed in social production, since frictional and structural unemployment are inevitable. The unemployment rate at full employment is determined by a number of factors, and, above all, the minimum salary. Its low level contributes to the fact that the terms of job search by young people who are looking for a job for the first time, as well as by those unemployed who are looking for a better paid job, are lengthened.
The natural rate of unemployment is also affected by the system of social insurance against unemployment, the authority of trade unions, the propensity of people to work, differences in growth rates by sectors of the economy, taxes, etc. Since these factors are volatile, the rate of natural unemployment changes over time.
Calculations show that the level of natural unemployment increases with an increase in actual unemployment. An increase in unemployment during periods of decline in production ends with its return not to its original level, but to a higher natural level. So, if in the first half of the 1970s. it was 1.1% in Germany, 6.5% in Canada, 5.4% in the USA, then in the mid-1980s. it was equal, respectively: 7.2; 10.5; 7.2%. This is explained as "rusting" human capital and the different market power of the employed and the unemployed. The latter do not participate in negotiations on working conditions and the wage rate, and the workers are interested in the fact that the increase in demand for labor in the boom phase is transformed into an increase in the wage rate, and not into an increase in the number of employees.
To determine the level of natural unemployment, economists use the average value of actual unemployment over a long period. The average value for 40-50 years smooths out cyclical fluctuations. With this calculation, the natural rate of unemployment for the period from 1948 to 1985 in the United States was 5.6%.
Unemployment at the natural rate is necessary because it keeps inflation in check. In a full-employment economy, any surge in aggregate demand AD results in a rise in the price level, as production cannot adequately respond to increased demand due to a lack of resources (Figure 9.1).
The actual unemployment rate in a given period may be higher than the natural level, in which case there will be a deficit in aggregate demand and cyclical unemployment. Consequently, cyclical unemployment is associated with fluctuations in the economic environment. During the recession phase in the economy, the demand for goods and services decreases, which leads to a reduction in production and employment. In the upswing phase, on the contrary, the demand for consumer and investment goods, and hence for labor, grows.
The level of cyclical unemployment u c is defined as the difference between the actual u and natural u* unemployment rates:
u c \u003d u - u *.
Cyclical unemployment indicates the incomplete use of productive resources. In this case, the actual volume of national production Yf is below the potential Y*. If the actual level of GDP is equal to potential Y f= Y*, then the natural unemployment rate is equal to the actual u = u*. In this case, there is no cyclical unemployment.
Therefore, the lower the actual GNP compared to potential, the greater the cyclical unemployment:
Y f< Y* Þ u >u* .
Difference between potential GDP Y* and actual Y f forms a market gap (GDP gap), the analysis of which in the 1960s. conducted by an American economist A. Oken. On the basis of empirical research, he found a stable relationship between the magnitude of cyclical unemployment and the GDP gap.
He expressed the established dependence by the formula
,
where g is Okun's number (parameter).
The meaning of this formula expresses the so-called Okun's law: if cyclical unemployment increases by 1%, then actual GDP lags behind potential GDP by g%.
Observations show that the Okun parameter is different for different countries. In the 1960s in the United States, according to Okun's own calculations, when the natural unemployment rate was 4%, the parameter g was 3%. This means that each percent of cyclical unemployment reduced the actual volume of GDP by 3% compared to GDP at full employment.
Suppose the natural unemployment rate u* is 6%, and the actual u is 9.5%. In this case, the gap between actual GDP and potential GDP will be: (9.5 - 6) x 3 = 10.5%. Knowing the volume of GDP, we obtain the absolute underproduction of GDP from unemployment. If, for example, GDP is $500 billion, then its underproduction will be $52.5 billion (500 billion x 0.105). Such will be the economic losses of society from unemployment.
It also follows from Okun's law that if production falls by 3% during a downturn, this increases cyclical unemployment by 1%. In addition, the law states that the annual growth of real GDP must be 3% in order for unemployment to remain at the same level, since the labor force is growing at about this rate every year.
As for the Russian economy, it can be assumed that at present the Okun coefficient here is a little over 5%. The fact is that the fall in GDP in Russia in the 1990s. was about 50%, and the unemployment rate - 9.3%. In the first half of the 1990s. Okun's coefficient was even higher - 10, since during this time production decreased by 40%, and unemployment increased by only 4%.
Why didn't unemployment rise in Russia against the backdrop of such a rapid decline? In other words, why is Okun's ratio so high? The explanation should be sought, firstly, in the fact that in Russia in the first years of reforms, accompanied by a recession, it was not jobs as such that were reduced, but vacancies; secondly, in pursuing a soft monetary policy aimed at supporting enterprises and their employees, at maintaining wage payments, despite the decline in production, etc.; thirdly, in maintaining the collective-group nature of property, which was established in the course of voucher privatization. It is known that in the process of voucherization, the so-called second variant of privatization won, according to which the ownership of the means of production passed into the hands of labor collectives.
Examples of problem solving.
Unemployment rate = 10,000/100,000 * 100% = 10%.
According to Okun's law, an excess of unemployment above the natural rate by 1% leads to a fall in GNP by 2.5%. In accordance with this, the actual GNP is less than the potential one by 10%. To solve the problem, we make a proportion:
Potential GNP -100%
180 000 monetary units(actual GNP) - 90%.
Potential GNP will be 200,000 monetary units.
Tests.
1. What definition of inflation do you think is correct?
a) an increase in prices in the economy;
b) a drop in production;
c) a fall in the purchasing power of money;
d) a phenomenon that is possible with both rising and stable price levels.
2. Which of the following causes demand-pull inflation?
a) rising prices for raw materials and transport services;
b) an increase in the interest rate;
c) higher wages in well-performing enterprises;
d) growth in government spending;
e) decrease in investments.
3. Cost-push inflation is caused by:
a) falling prices for equipment, raw materials and materials;
b) rising prices for factors of production;
c) an excess of aggregate supply over aggregate demand;
d) freezing wages and prices.
4. Unemployment in a market economy can be the result of:
a) unwillingness to work at the existing wage rate in the market;
b) the excess of aggregate supply over aggregate demand;
c) changes in the structure of demand for goods and services;
d) all of the above reasons.
5. In accordance with the classical theory of employment, there is only:
a) frictional unemployment
b) structural unemployment;
c) cyclical unemployment;
d) voluntary unemployment;
6. The Keynesian theory of employment states that:
a) necessary natural methods population regulation;
b) market equilibrium guarantees full employment;
c) unemployment grows out of the internal laws of the market;
d) in a market economy, unemployment is only voluntary.
7. The Phillips curve captures the relationship between the inflation rate and:
a) money supply
b) the unemployment rate;
c) the level of interest;
d) the political economic cycle;
e) the real rate of interest.
8. Who will be the least affected by unexpected inflation:
a) those whose nominal income grows, albeit more slowly than prices rise;
b) those who have money savings;
c) those who became debtors during the pre-inflationary period;
d) all of the above.
9. Inflation caused by excess demand is characterized by a shift in the curve:
a) aggregate supply to the left;
b) aggregate demand to the left;
c) aggregate demand to the right;
d) aggregate supply to the right.
10. The adult population of the country is 150 million people. The number of employed is 90 million people, the unemployment rate is 25%. The economically active population will be:
a) 100 million people;
b) 120 million people;
c) 140 million people;
d) 160 million people
conclusions
1. Inflation is one of the forms of macroeconomic instability of the market economy, causing a number of disruptions in economic relationships and having a devastating effect on production, distribution and exchange, on the motivation of workers, on the functioning of the entire market mechanism.
2. Inflation can take different forms: open and hidden (suppressed); creeping, galloping and hyperinflation; demand-pull and cost-push inflation; predictable and unpredictable.
3. open inflation manifests itself in a continuous rise in the price level, which forms adaptive inflationary expectations among business entities, hidden - in an increase in the shortage of goods and services, which ultimately results in a deformation of the market mechanism, since economic agents are deprived of price signals.
4. The division of inflation into creeping, galloping and hyperinflation is carried out depending on the speed of inflationary processes.
5. Demand-pull inflation is generated by an excess of aggregate demand over aggregate supply, cost-push inflation (sellers' inflation) - by rising prices for factors of production.
6. Forecast inflation is inflation that is factored into expectations and behavior economic entities before its implementation. Unpredictable inflation is inflation that comes as a surprise to the population, in connection with which redistribution processes are observed in society that enrich some groups of the population at the expense of others.
7. The fight against inflation is possible only at the macroeconomic level and by the state. Anti-inflationary measures can only be applied to open inflation; the repressed is beyond limitation because it cannot be measured. The set of government measures to combat inflation includes:
a) limiting the money supply;
b) an increase in the discount rate;
c) an increase in the required reserve ratio;
d) cutting government spending;
e) improvement tax system and an increase in tax revenues to the budget.
One of the determining factors in modern world becomes unstable. The traditional markets for raw materials are changing, the amplitude of fluctuations in currency systems reaches dangerous limits, and the losses from unemployment are becoming more and more significant.
Paul Samuelson
Cyclical development of the economy. Types of cycles. Cycle phases and dynamics economic indicators. Structural crises.
Purchasing power of money. essence of inflation. Causes and main forms of inflation: moderate, galloping and hyperinflation; open and suppressed inflation. The concept of inflation expectations. Demand-pull inflation and cost-push inflation. Stagflation. Measuring the rate of inflation using a price index.
Economic and social consequences of inflation. Adaptation and anti-inflationary policy.
Unemployment, its essence and causes. The main types of unemployment: frictional, structural, cyclical, their distinctive features and ways of partial overcoming.
The problem of full employment. The concept of "natural rate" of unemployment. Unemployment rate and excess unemployment. employment indicators. productive employment.
Socio-economic losses from unemployment. The essence of Okun's law. Directions and types of state regulation of the labor market.
Relationship between unemployment and inflation. The essence of the Phillips curve and the limits of its practical application.
From the previous topic, you already know that economic growth is not the same as economic development. On the way to the growth of the national product, there are periods of sharp acceleration, accompanied by an increase in the price level and inflation, and periods of decline in production and employment, when economic growth slows down or even stops. These violations of macroeconomic equilibrium are considered by economic science as manifestations economic instability.
As practice shows, this uneven development of the market economy is rhythmic: acceleration and deceleration of economic growth alternate in a certain rhythm, forming economic cycle.
Business cycle are fluctuations in macroeconomics, consisting of alternating recessions and upsurges in general business activity.
The propensity of a market economy to repeat economic phenomena was noticed by economists in the first half of the 19th century. They drew attention to the periodicity of such phenomena as an increase or decrease in demand, an increase in production volumes or its stagnation.
A certain sequence in the alternation of these phenomena was also revealed. The problem was of such great importance for economic development that almost none of the leading economists ignored it. Recognizing the objective nature of the economic cycle, economists propose to study this phenomenon through an analysis of internal and external factors that affect the nature and duration of the cycle.
To external factors Cycle researchers include such non-economic phenomena as fluctuations in solar activity, wars, revolutions, earthquakes, population migration. The cycle can be affected by major mineral discoveries, scientific and technological discoveries and innovations.
Major innovations such as railways, aviation, automobiles, computers, have a great impact on consumer spending and investment. But such global innovations appear very irregularly and therefore cause economic instability. Some economists see the reason for fluctuations in the economy in the ratio of optimism and pessimism of participants in business life, that is, they single out the psychological factors of the cyclical nature of the economy.
Theories that explain the economic cycle by the presence of external factors are commonly called external, Unlike internal theories that consider cyclicality as a product of factors inherent in the economy itself. The main internal, inherent in the economic system itself, the cause of fluctuations in business activity, most economists call the dynamics of the ratio of aggregate demand and aggregate supply.
If a boom began in some industries, causing a sharp increase in demand for machinery and equipment, then it is quite natural to assume that the phenomenon will repeat itself in 10-15 years, when these machinery and equipment will be completely worn out. In addition to the physical depreciation of fixed capital, there are other reasons that give rise to the economic cycle. Among them are:
Modern economic theory assigns to external factors the role of a generator of long-wave impulses, while internal causes are considered as converters of these impulses into fluctuations in large cycles.
The general "pulse" of the economic cycle covers all aspects of economic development: the level of production, employment, income and prices, stock prices, sales volumes, construction of various facilities, etc. Because the economic processes affect such non-economic phenomena as fertility, people's health, marriages, as well as political events, we can conclude that the economic cycle has penetrated into all spheres of a nation's life.
No cycle is similar to the other in terms of intensity and duration of fluctuations in the main macroeconomic indicators: GNP, employment and price levels. But there are a number of characteristics that are inherent in any cycle to one degree or another. First of all, this is the passage of the economy in the course of the cycle in succession of four phases - crisis, depression, recovery and recovery.
A crisis (recession, recession) is a phase of the economic cycle during which real GNP decreases for two or more quarters.
Let's try to present the general picture of the crisis as a deep shock to the entire economic system from top to bottom.
The market, which has soaked up all the produced goods without hindrance, at some time becomes overcrowded, the goods continue to flow, and the demand gradually decreases and finally stops altogether. Anxiety is spreading throughout the market. Demand has disappeared and inventories are huge, and many enterprises continue to operate at full capacity due to inertia. A sharp fall in prices follows.
Truly heroic efforts are being made to save the situation, but all means are futile. Liquidations of enterprises and collapses begin. First of all, banks and credit institutions are dying. The trust of market participants to each other is undermined.
All require cash payment. Bills of exchange, which yesterday did not raise doubts, are becoming mere paper. The interest rate goes up. Crowds of unemployed appear on the streets. Starvation, suicide begins. According to such a dramatic scenario, the crises of the last century passed.
The most grandiose attempt to overcome the crisis with the help of state events was undertaken by the United States during the Great Depression. Its essence is known to you from the previous lectures. However, despite certain results, industrial crises continued.
In a crisis, only enterprises with great financial capabilities continue to make a profit by reducing costs. Medium and small enterprises do not have such an opportunity and suffer bankruptcy. Their ruin has its advantages for the industry as a whole, as it increases the overall level of labor productivity. This lowers the cost of goods and, as a result, weakens the fall in the rate of profit. It turns out that the crisis reveals not only a limit, but also an impulse in the development of the economy, gives rise to predominantly intensive development, performing a stimulating function.
But the transition to the expansion of production cannot happen overnight. Therefore, in place of the crisis comes phase of depression.
A depression is the post-crisis phase of the cycle when the recession lasts substantially longer than two quarters.
The level of production remains stable, but very low in relation to the beginning of the crisis. The unemployment rate remains high. But the fall in prices is suspended, commodity stocks are stabilizing.
Recovery is a phase of the economic cycle during which real GNP increases and employment grows.
Recovery is accompanied by a slight increase in the level of production, some reduction in unemployment. Gradually, prices rise, and the interest rate begins to rise. On the commodity market growing demand for new industrial equipment. The emerging recovery covers an increasing number of industries. At the end of the revival phase, the incentives for renewal exhaust themselves, and extensive development begins again in the upswing phase.
The rise is the highest phase of the cycle, when the level of production exceeds that achieved in the previous cycle.
The rise often becomes a rush. Prices are skyrocketing. Unemployment is reduced to a minimum, with a simultaneous significant increase in wages. The demand for products of industries that determine trends in scientific and technological progress is growing sharply, the demand for raw materials is increasing, and their prices are rising. The economy is approaching the next round.
A new cycle begins, but with different characteristics, duration and depth. Even from this largely superficial picture, it can be seen that each of the phases of the cycle has the ability to reproduce the subsequent phase. As a result, the economic cycle as a whole acquires the property of reproducing a new cycle.
What is the duration of the cycle? Let us turn to the experience of the highly developed US economy. The economic system of this country between 1854 and 1986. went through 30 business cycles of varying intensity and duration. From the point of view of duration, the following types of cycles are distinguished.
Large (classical) economic cycles cover a period of 7-11 years. Within a large cycle, two or three small, or "commodity" cycles lasting 3-5 years are usually distinguished, which are generated by the dynamics of the value of inventories at enterprises. Two large cycles roughly characterize in time the cycles associated with fluctuations in investment activity in the construction industry. These are building cycles. If we consider economic growth from a historical point of view, then from the beginning of the XIX century. you can find very long cycles lasting 50-60 years, the existence of which was revealed in the 20s of the XX century. Russian economist N.D. Kondratiev.
Having processed data on the dynamics of the most important economic indicators in England, Germany, France and the United States using special mathematical methods, Kondratiev discovered interesting patterns. Countries with market economies in their development regularly go through stages of rise and fall, which are repeated in 50-60 years. These cycles are still called "Kondratieff Waves". They are associated with a radical upgrade of equipment, which has especially long terms services (railways, bridges, canals, dams).
The fate of Nikolai Kondratiev is very tragic. His views were at odds with the "party approach to economic planning" theory. In 1930 he was arrested on false charges and sentenced to 8 years. At the end of 1936, Kondratiev fell seriously ill and began to go blind. However, in 1938 he was re-convicted in the same far-fetched case and shot. He was only 46 years old.
The modern picture of the market economy began to differ from the traditional scheme. For example, the industrial cyclical crisis of the mid-70s. was exacerbated by the oil crisis, but only in oil-consuming countries. The same countries that had their own sources energy resources, not only did not suffer as a result of the two crises, but even tended to develop somewhat.
On the other hand, the expected rapid development of industry in the recovery phase in many countries does not occur as a result of a sharp aggravation of the situation caused by the environmental crisis. Oil, food, energy, raw materials crises are supplemented in recent decades by crises monetary system. These are the so-called structural crises.
Structural crises are generated by disproportions between the development of individual areas and industries, are, as a rule, protracted and do not always coincide with the onset of cyclical crises.
Thus, the reason for the cyclical nature of the development of the economy lies in the conflict between the conditions of production and the conditions of sale, in the contradiction between production, which is striving for expansion, and the growth of effective demand that does not keep pace with it. The material basis for the periodicity of crises is the renewal of fixed capital.
There is another approach to explaining the causes of crises in a market economy. According to this approach, the abstract possibility of crises is connected with the function of money as a means of circulation: the discrepancy between purchase and sale in place and time can create the prerequisites for breaking many links in the chain of sales and purchases; and as a means of payment: any entrepreneur cannot have a guarantee that by the time of payment the buyer of his products will be solvent, and then this rupture of obligations will cause a chain reaction.
Since there are different views on the causes of cyclical fluctuations, there are different approaches to the problem of their regulation. But there is also a common understanding of the fact that, firstly, the state is able to smooth out cyclical fluctuations, and secondly, the state must do this in order to achieve economic stability.
There is also a common understanding of what should be, in general, the state's line of conduct aimed at overcoming cyclical fluctuations. This is already known to you from 3.1. "The Politics of Expansion and the Politics of Containment".
In the decline phase all government measures should be aimed at stimulating business activity. In the area of tax policy this means lowering tax rates, providing tax incentives for new investments. In the field of monetary policy, this is a decrease in interest rates for loans issued, an increase in bank credit resources, i.e. revival economic life with additional loans.
During the rise economic situation, in order to prevent overheating of the economy and related painful phenomena, the state pursues a containment policy, which includes opposite measures in the field of fiscal and monetary policy.
That is, in order to smooth out cyclical fluctuations, the state must implement a counteraction policy: measures must go in the opposite direction to the current fluctuations in the economic situation.
Of course, these are only general guidelines for countercyclical policy. We will talk in more detail about the methods of state regulation of the economy in the next paragraph.
An integral element of the modern economic cycle has become inflation. This is another manifestation of macroeconomic instability.
inflation (from lat. inflatino Bloating is a process of raising the general level of prices for goods and services, in which the purchasing power of the monetary unit falls.
Purchasing power of money This is the quantity of goods and services that can be bought at a given price level for a given monetary unit.
At first, the cause of inflation was considered the widespread transition to paper money, because they can be printed in any quantity. There was a certain reason for this statement, and when frenzied inflation broke out in Germany after the First World War (prices rose a trillion times in three years!), The blame for this lay largely on the country's Central Bank.
However, even after the emission of money was taken under the strict control of parliaments, inflation did not disappear. And then economics took up deeper research and found that inflation is diverse, it has several causes, many forms of manifestation and, accordingly, should be different ways fight with her.
Note that not every price increase is an indicator of inflation. Prices may rise due to improved product quality, deterioration in the conditions for the extraction of fuel and raw materials, and changes in social needs. But this will not be an inflationary rise in prices, but to a certain extent a logical, justified rise in prices for individual goods.
For example, the transition to the production of new modifications of cars with an economical diesel engine, corresponding to international standards, obviously, will lead to an increase in the selling price: more perfect and high-quality products are more expensive and valued more.
But if there is a systematic increase in prices for mass-produced cars of the same model without any improvements, and often with deterioration in performance, then it has a pronounced inflationary character.
P. Heine: “We should not forget: prices change not only for commodities, but also for measuring their value, i.e. of money. Inflation is not an increase in the size of objects, but a decrease in the length of the ruler that we use.
Inflation is an extremely complex, controversial, insufficiently studied process.
First of all, inflation is distinguished by rates as 1) moderate or creeping (usually no more than 10% per year); 2) galloping
(from 20 to 200% per year); 3) hyperinflation(more than 50% per month for three quarters).
Economic theory considers moderate inflation as a boon for economic development, and the state as the subject of an effective economic policy. It allows you to adjust prices in relation to changing demand conditions.
Galloping inflation is already a process that is difficult to manage, a serious strain on the economy, although most transactions and contracts take into account such a rate of price growth.
Hyperinflation is the greatest danger, causing enormous damage to the population, even to the wealthy sections of society, trade turns into barter, and the national economy is destroyed.
Guinness Book of Records: The world's worst inflation
in Hungary in June 1946, when the gold penge of 1931 was worth
130 trillion paper penge. On June 3, 1946, banknotes in the amount of "aegimillion billion" were issued.
According to the forms of manifestation are distinguished open and suppressed inflation. Open inflation is manifested in rising prices. Suppressed inflation is inherent in an economy with administrative control over prices and incomes: outwardly, prices are stable, and an excess of money is transformed into a shortage of goods, there are constant angry queues and a “black market”, which to some extent reflects real prices.
inflation may be balanced when price increases are moderate and simultaneous for most goods and services, and unbalanced when prices rise at different rates for different commodity groups.
According to the nature of expectations, economists distinguish between expected inflation and unexpected. Expected inflation can be predicted: take into account its rates in collective agreements, prices for production factors, the government can change taxes and transfers in a timely manner, then the impact of inflation on the economy as a whole will be insignificant.
Another thing is unexpected inflation. It is characterized by a sudden jump in prices, which has an extremely negative effect on money circulation and the taxation system.
In such a situation, if inflationary expectations already existed in the economy, the population sharply increases the cost of purchasing goods, which in itself creates difficulties in the economy, distorts the real picture of needs in society and leads to a breakdown in economic ties. Thus, a sudden jump in prices could trigger further inflationary expectations and shape inflationary psychology- a thing, although subjective, but quite real and extremely dangerous, since it gives rise to a vicious circle of self-sustaining inflation.
From the point of view of cause, one distinguishes demand-side inflation and cost-push inflation.
Demand-pull inflation occurs when aggregate demand is greater than aggregate supply (too much money “chasing” fewer goods as government, household, and firm spending grows faster than production).
Causes of demand inflation:
Cost-push inflation occurs when prices rise due to an increase in the cost of production.
Causes of cost inflation:
The danger of cost-push inflation for society is connected with the so-called inflation spiral: a general increase in prices leads to a decrease in real incomes of the population, hence the demand for higher wages and the state policy of indexing incomes. This, in turn, increases costs, which leads to a new jump in prices.
In practice, it is not easy to distinguish one type of inflation from another, they closely interact, so wage growth, for example, can look like both demand-pull inflation and cost-push inflation.
Since the second half of the 20th century, prices in all developed countries have been growing steadily, and since the 70s. - even during periods of economic downturns, when the underload of production reached significant proportions. This phenomenon, as you remember, is called stagflation.
Stagflation - inflation combined with stagnation (stagnation, depression) of production and high unemployment.
Quantitative assessment of inflationary processes is carried out with the help of inflation indicators. The inflation rate is measured using price index.
The price index is a relative indicator that characterizes the ratio of prices over time. To calculate the price index, the prices of the base year are usually taken as 100, and the prices of subsequent years are recalculated in relation to the base year.
Inflation rate for the current year is determined as follows. The price index of the current year is subtracted from the price index of the previous year and divided by the price index of the previous year, and then multiplied by 100%.
In a market economy, inflation has become almost an integral attribute of economic life. This allows us to talk not just about the consequences, but about some specific functions of inflation.
We have already considered the point of view according to which a small amount of inflation (say, an annual increase in prices by 3-4%), accompanied by a corresponding increase in the money supply, can stimulate production. But whatever the supposedly “positive” functions of inflation, getting out of control and even remaining relatively weak, regulated, it has a whole range of purely negative, negative influences on the course of economic development. Let us briefly mention just a few of them.
First, inflation affects efficiency at the microeconomic level. The higher inflation, the more disrupted relative prices, the weaker their relationship with costs. Remember how in Russia, until the end of 1993, cattle were fed with bread, since the prices for it were significantly lower than the costs, which resulted in inefficient distribution limited resources society.
Second, inflation makes it difficult to macroeconomic policy due to disproportions between sectors of the economy, a decline in production and a decrease in incentives to work.
Thirdly, inflation causes a flight from money to goods, turning this process into an avalanche, exacerbates the hunger for goods, revives barter.
Fourth, when inflation is high, the owners of factors of production bear huge losses, because in the short term, the prices of factors of production are fixed, and the prices of final goods and services rise very quickly. As a result, there is a sharp decline in the real incomes of the owners of factors of production.
Fifth, inflation has a negative impact on the fiscal system due to the Tanzi-Oliver effect (the Latin American economists who first paid attention to it). Its essence is that inflation devalues tax revenues, which are accrued, for example, in the third quarter, and are paid in the fourth quarter of the year, when their real value has already fallen.
Sixth, inflation is destructive to accumulated wealth, especially in the most liquid forms. This applies to the savings of the population, and to banks and institutions that provide loans.
Seventh, the most important social consequence of inflation is the redistribution of national income, the decline in the living standards of the population, since both nominal and real wages lag behind sharply rising prices, even if incomes are indexed.
Eighth, the internationalization of production facilitates the transfer of inflation from country to country, complicating international monetary and credit relations.
Speaking about the redistribution of income, it must be borne in mind that although the entire society bears the losses from inflation, this happens to an unequal degree. During inflation, it is advantageous to live in debt. Therefore, creditors lose much more than debtors. The biggest beneficiary of inflation is the government, because it is the country's biggest debtor, and inflation devalues debts.
To a lesser extent, those who can dramatically increase their income also lose. And pensioners, disabled citizens and public sector employees do not have such an opportunity, so they bear the main burden of inflation on their shoulders.
There is also an age factor. Among those who receive loans, the absolute majority are those who are under 45 years old, so it turns out that through the use of loans, they actually redistribute in their favor the wealth that the older generation accumulated in the pre-inflationary period.
The negative social and economic consequences of inflation are forcing the governments of different countries to pursue a certain economic policy in this area.
There are two possible approaches to managing the economy in the face of inflation: the first is to develop an adaptation policy, i.e. adjustment to inflation, the second - in an attempt to eliminate inflation with the help of anti-inflationary measures.
Adaptation policy is based on the fact that all subjects of a market economy take into account inflation in their actions, primarily through accounting for losses from a decrease in the purchasing power of money.
Adaptation measures include: indexation of the interest rate by the value of the inflation premium; introduction of inflationary wage adjustments into labor agreements; perestroika family budget in the direction of the most inelastic goods and services, the rapid materialization of money; increase in the share of borrowed funds relative to own funds through the issue of shares, leasing, factoring.
Anti-inflation policy proceeds from the fact that the modern market economy is inflationary in nature, since it is impossible to eliminate all factors of inflation in it (budget deficit, monopolies, disproportions in the national economy, inflationary expectations, the transfer of inflation through foreign economic channels, etc.). Therefore, the goal of anti-inflationary policy is to make inflation moderate, controlled, to prevent its destructive scale.
For this, the following measures are applied:
Among the most painful consequences of a recession in the economy (depression) is unemployment.
Unemployment is a surplus of labor force caused by the excess of the supply of labor force over the demand for it.
Reasons for unemployment:
At the same time, it should be clarified that the category of unemployed includes only those who are looking for work or are waiting to return to work. After all, “unemployed” and “unemployed” are not identical concepts. The person may not work different reasons: some study and do not work yet, others are retired and no longer work, others simply do not want to work.
In the United States, for example, only those citizens who are unemployed, immediately ready to work, have been actively looking for work for the last 4 weeks, and are waiting to start working (already invited) within 30 days are considered officially unemployed.
Depending on the causes, the following types of unemployment are distinguished.
frictional unemployment(from English. Friction- friction, disagreement) is unemployment caused by constant and necessary changes in the distribution of society's resources between types and spheres of production of goods and services.
It arises either due to the fact that employers do not have complete information about the availability of the categories of workers they are interested in, or employees do not know about the availability of suitable jobs for them. Frictional unemployment covers those who are in a position “between jobs” (voluntary or involuntary change of place of work, residence; temporary unemployment of women associated with the birth of a child; job search by those who have returned from military service, etc.).
In such a situation, there is always a certain part of the people, so this type of unemployment exists constantly. It is believed that frictional unemployment is society's payment for an efficient economy. Anything that improves information about jobs and the availability of workers, or reduces the time it takes to find a job, reduces frictional unemployment.
Structural unemployment caused by changes in the structure of the national economy - the withering away of some professions and even entire industries, the emergence of new ones, the restructuring of the regional economy, changes in technology.
Structural unemployment differs from frictional unemployment precisely in that during frictional unemployment, the worker retains sufficient qualifications to change industry or production. Those who actually lost their jobs due to structural changes are faced with the need for a complete or significant retraining. Now Russia is faced with a structural adjustment that has no analogues in world history.
We are talking about the elimination of millions of jobs, the existence of which did not meet the needs of the country. For the most part, those who have occupied these positions (especially millions of managers) have no chance of finding a job without a radical retraining.
American experts in the late 90s developed a forecast for the development of the US labor market for the next 5-10 years and discovered the inevitability of serious changes in it. It turned out that the share of employed in the industry will fall from 18 to 9.7%, 43% of workers will work in the field of computer science.
There will be a special demand for people who have the following specialties: accountant-auditor, specialist in the re-education of offenders, nurse, Public Relations Specialist, Programmer, Occupational Therapist, Medical Equipment Technician. The state and needs of the labor market of the new century as a whole confirm this forecast.
Structural unemployment is caused by objective reasons, therefore it is inevitable and always exists in society, but it can be reduced by the creation by the state and private firms of a network of retraining centers.
Cyclical unemployment occurs as a result of cyclical downturns in production, causing a decrease in aggregate demand for all factors of production, including labor.
This is the most "unpleasant" type of unemployment - often massive and painful. cyclicality economic growth is insurmountable, therefore, it is not possible to eliminate this type of unemployment, however, anti-crisis measures can smooth out the economic downturn and, accordingly, reduce the number of cyclical unemployed.
However, it suggests that full employment labor resources does not mean the complete absence of unemployment.
In a dynamic economy, some part of the workers, for many reasons, is inevitably and always out of work. Therefore, the question arises: what number of unemployed can be considered acceptable if the labor market is working effectively and the economy is not in recession? No one will give an absolutely exact answer to this question, however, economists still have a general understanding of what full employment is.
Full employment - the level of employment that develops in the country in the presence of only structural and frictional unemployment.
If the number of unemployed exceeds the average levels of frictional and structural forms of unemployment over many years in a given country, then this excess is most likely associated with the emergence of cyclical unemployment, i.e., with a recession in the economy. In the United States, for example, experts believe that full employment is achieved if 94-95% of able-bodied citizens have a job.
Thus, the concept of full employment comes from the idea of the existence of a natural rate of unemployment. - this is the state of the labor market, in which there is an approximate balance between the number of vacancies and the number of qualified workers looking for work.
If the actual rate of unemployment in the country is higher than natural, this means that we are faced with excessive unemployment- a phenomenon undesirable and even dangerous in social and political terms.
Unemployment rate is the proportion (in percent) of the total economically active population of those people who are unemployed.
Full employment, natural rate of unemployment, excess unemployment and unemployment rate are the main interrelated indicators that are used to characterize the state of employment.
Guinness Book of Records: The lowest unemployment rate was registered in Switzerland in December 1973 (population 6.6 million people), the total number of unemployed was 81 people. In Europe, in 2012, the lowest unemployment rate in Austria is 4.4%, and the highest - in Spain (25.8%).
Full employment is an empty idea if it means employment in jobs where nothing useful is being produced. The semantic goal of the idea of full employment is productive employment.
productive employment- organization of the use of labor in such a way that the employed produce the goods and services necessary for the population at the lowest cost.
Unfortunately, in our country we have managed over the previous decades to create millions of positions of useless managers, hundreds of thousands of jobs for quasi-scientists, for reserve workers in large enterprises especially in the branches of the military-industrial complex.
Despite the objective nature of unemployment, socio-economic the losses it generates are obvious:
First, products are underproduced; some part of the GNP is lost.
Secondly, tax revenues are reduced: the worker receives income that is taxed.
Thirdly, the standard of living of those who have lost their jobs is declining, since unemployment benefits are lower than wages.
Fourthly, the psychological state of the unemployed is deteriorating due to the loss of qualifications and self-esteem, moral decline begins.
Fifthly, social and political tension in society is growing.
To determine the magnitude of the loss of GNP as a result of unemployment, the so-called Okun's law(was formulated by the American economist Arthur Oken).
Okun's law: the excess of the actual rate of unemployment of its natural level by 1% leads to a lag in the volume of actual GNP compared to potential GNP by 2.5%.
Assessing unemployment as a socio-economic phenomenon, one cannot unequivocally state whether it is good or bad. From the point of view of a person left without a job, this can be a tragedy. It is no coincidence that Americans say: "Unemployment is 100% if you yourself are unemployed." And from the point of view of economic dynamics, unemployment is an objective necessity.
Moreover, frictional unemployment is a means of more efficient deployment of society's labor resources, and structural unemployment, if, of course, the benefits from retraining workers exceed the costs of it, brings society a net gain.
However, given the negative consequences that cyclical unemployment has on society, and frictional and structural unemployment on people who find themselves out of work, employment needs targeted state regulation.
Directions of labor market regulation:
In world experience, two main types of impact on the level of employment have been developed:
In this way, market system arithmetic "full employment" and too high unemployment are equally contraindicated. At an unemployment rate equal to its natural rate, one speaks of effective full employment, which means a certain ratio between employment and unemployment.
Already in the 50s. many economists and politicians have suggested that it is possible to reduce the unemployment rate by being patient with a higher rate of inflation.
From the previous topic, you know that the fight against inflation inevitably leads to a decrease in investment in the economy, as it requires limiting the money supply by reducing government investment and raising the rate loan interest.
In turn, the reduction in investment leads to a reduction in the demand for labor and, accordingly, an increase in cyclical unemployment. Attempts to reduce the mass of the unemployed by increasing the number of jobs require an increase in investment by expanding public investment programs and a low interest rate policy. This inevitably raises the rate of inflation. The same result is obtained in attempts to mitigate unemployment through the system of benefits to the unemployed.
This relationship was discovered on the example of the English economy by the Australian economist Arthur Phillips. This phenomenon, as Phillips found statistically, existed in the English economy for almost 100 years.
Phillips curve
Phillips curve segment to the left of the point M characterizes demand-pull inflation, which can occur as a result of government attempts to establish an artificially high level of employment. Segment to the right of the point M reflects the fall in prices during the crisis.
During the period of stagflation, there is not a movement along the Phillips curve, but a series of shifts of the curve itself to the right and up, which indicates an increase in both inflation and unemployment at the same time.
Un- the natural rate of unemployment;
Rp - the growth rate of prices at the natural rate of unemployment.
Until the mid 70s. many economists still believed that A. Phillips' hypothesis continued to be working. However, the real Phillips curve, based on the real relationship between inflation and unemployment in the United States for 25 years (1961-1986), turned out to be a twisted broken line.
The fact is that inflation is growing much more steadily than it is falling. An increase in aggregate demand almost always leads to higher inflation and lower unemployment. But a fall in aggregate demand does not always have symmetrical repercussions. Even, most likely, the economy will not give these results.
Therefore, the relationship between inflation and unemployment can be clearly traced only in the short term, and it was precisely the opportunity to choose a relatively long-term fiscal and monetary policy that economists hoped for when they received the discovery of A. Phillips in 1958.
In the short run, the steeper the Phillips curve, the more significant the reduction in inflation due to the more modest decline in employment. Quantitative estimates are as follows: to reduce inflation by 1%, unemployment during the year must be 2% above its natural rate. According to Okun's law, this means a decrease in real GNP by 5% of potential.
The problem of the need to pay unemployment for lowering inflation is solved ambiguously. This is a dilemma. Some economists argue that quantitatively such a fee is not large, while others speak of the moral and psychological inadmissibility of even a slight increase in unemployment. In any case, no one has proven that it is more profitable for the economy to fire a person than to provide him with a job and get a larger amount of product as a result.
D.Kennedy : "We believe that if people have the talent to invent machines that push people into the ranks of the unemployed, then people will have the talent to find new jobs for the unemployed."
TEST QUESTIONS
TASKS AND EXERCISES
janitor in housing and communal services;
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Unemployment rate, % |
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Price index |
Draw a graph that characterizes the Phillips curve.
Actual unemployment rate = 9.5%.
Natural rate of unemployment = 6%.
Nominal GNP = 3300 billion rubles.
9. Establish a correspondence between the phases of the cycle and their content:
10. Establish a correspondence between the forms of unemployment and their content:
TASKS FOR THE WORKSHOP
TESTS
BLITZ POLL
BASIC CONCEPTS
Adaptation policy
Anti-inflation policy
Counter-cyclical policy
Unemployment
Hyperinflation
Gradualism
Depression
Natural rate of unemployment
Okun's law
Long-term unemployment
Excess unemployment
Inflationary psychology
Inflation
cost inflation
Demand inflation
Phillips curve
A crisis
revival
Official unemployment rate Suppressed inflation Rise
Purchasing power of the currency
Full employment
productive employment
seasonal unemployment
Stagflation
Structural unemployment Structural crises Inflation rate Frictional unemployment Cyclical unemployment Business cycle
LITERATURE
ABOUT TOPICS
Unemployment and its impact on the state of the economic potential of society. Pouken's law
Both 100% employment and high unemployment are contraindicated in a modern market economy.
If we assume 100% employment of the population, then the factor of inefficient use of labor force will appear.
There must be a certain reserve of labor force in the labor market. This reserve is called the natural rate of unemployment. 5-7% of the unemployed of the able-bodied population.
If the unemployment rate is high: Inefficient use of labor and high unemployment is fraught with social explosions.
Unemployment is measured by two main indicators.
1. Unemployment rate - is defined as the proportion of officially registered unemployed in the working-age population.
This indicator does not provide a complete picture of employment situations. The study of employment problems, the development of government programs are carried out on the basis of the level and duration of unemployment.
2. Duration of unemployment.
Unemployment, being a product of a decline in production, becomes a link in economic instability and exacerbates this decline. Unemployment worsens the standard of living of both the unemployed and those who have a job, because an excess of labor in the labor market is a good background for lowering the price of labor. With a high level of unemployment, conditions are created for the emergence of social conflicts in society. Business activity is deteriorating. Often free capital flees from regions of high risk to regions where there is a stable economic development. The decline in people's living standards leads to a decrease, a decrease in consumer demand, to a decrease in the level of savings. And in general, it leads to a decrease in the level (curtailment of part) of production.
Unemployment causes direct losses to society, which are manifested in the following:
Each percentage increase in unemployment results in a shortfall of 2.5% of GNP for society.
Moderate unemployment is a boon for economic growth. Positive points:
Causes and types of unemployment
Many economic schools have tried and are trying to analyze the causes of unemployment. One of the opinions is the opinion of the economist priest Malthus (end of the 18th century), expressed in the work "Experience on the Law of Population". He decided that unemployment was caused by demographic reasons. As a result, their population growth rate exceeds the growth rate of the production of material goods and services. Population is increasing exponentially, and material goods and services - in arithmetic progression.
Karl Marx (second half of the 19th century) in his work "Capital" suggested that the cause of unemployment was the lagging demand for labor behind the rate of capital accumulation. Cyclic development of the market economy.
Pigus (1923), in The Theory of Unemployment, argues that imperfect competition operates in the labor market, which leads to an increase in the price of labor.
Reasons for unemployment:
Types of unemployment:
Problems of social protection of the population in conditions of unemployment
Modern Malthusians propose to maintain stability in the labor market with the help of a state policy of birth control.
Pigus and his supporters see the root of evil in high wages. Hence, they propose to reduce wages, as well as the fact that the state should employ those who do not claim high wages. Use of part-time work.
Society should try to minimize the losses from unemployment. First of all, it must create conditions for the unemployed so that they can survive until they find a job, while society achieves a certain social effect, shows humanity and social stability, which is the basis for further development and subsequent investment. Somehow, both the physical and spiritual health of the society is maintained, and, consequently, the labor force, which at a certain moment becomes unemployed.
Methods:
Also, society represented by the state can develop programs to eliminate unemployment. Such a program may include retraining (retraining) of employees.
In Russia, there is a system of measures to regulate and organize employment of the population.
Regulation of employment of the population, i.e. measures of financial-credit, tax policy aimed at the rational distribution of production forces are being developed. Encourage flexible working arrangements.
There is a federal public service employment. Provides an assessment of the state and analyzes the employment of the population.
The organization of public works is practiced. The state guarantees a number of types of social support for the unemployed:
