Anthony Carvajal Jacobo Porto Tuesday, April 9 2013 UNEMPLOYMENT

An unemployed person is defined as people without job or actively seeking for one. But this does not count children and elderly people it is only for the people who are in the ages to be working with no disabilities or impediments that make it hard for these people to work in other words this is called the workforce of a country. Unemployment is often used as a measure of the health of the economy. Usually high unemployment rates are bad for the countries and are one of the main contributors to a recession of an economy. But this isnt in all of the cases; for example in Spain the unemployment rate is of 26% in this final quarter but this is mainly because of hidden unemployment, which is a type of unemployment and will be explained further on. Low unemployment is obviously means that the economy is doing well and that there is no recession and the austerity measures are high (Presidential candidates always promise to create more jobs; this not only helps the economy but helps the life of many unemployed people). The current countries with the lowest unemployment rates are currently Switzerland and Japan; these countries have unemployment rates of 3.4% for Switzerland and 4.3% for Japan. Although they are very small countries Switzerlands has the most stable economy in the world, it never decreases it only increases or stays the same and it has done this for the past years. Japan only has 377,923 square kilometers which is about one third of Colombias square kilometers it its the third best economy in the world; although it fluctuates more than Switzerlands economy it is very efficient.

Why is unemployment important? Unemployment is important because an unemployed person does not work and if he does not work he does not pay taxes and relies solely on the government for the support. If the government gives them money (for example: welfare) the government cant use that money they were going to spend on creating more jobs(if there are no new jobs the unemployment rate will be the same). An unemployed person decreases there

spending which affects businesses and these businesses lay off more people because people are not spending enough money on their products which leads to more unemployment. The unemployed affect: the economy, the tax payers, the businesses and the people (high unemployment rates cause high amounts of poverty). And it doesnt stop, creating a cycle that compensates everyone.

There are many causes of unemployment but there are only three major ones. As technology advances, machines can replace workers and this lays off a vast number of employees because machines can do their jobs more efficiently, faster and they dont need to get paid. This is called structural unemployment. Unemployment also occurs with job outsourcing, when big companies move for example their call centers to India where the labour is much cheaper than in the U.S. This lays off many employees in the states and makes them unemployed. The most seen cause of unemployment is when consumer demand is low and the company has too much supply and it losses too much profit, so the company has to make cut backs and lays off the amount of people necessary so that they can still make money. This is called cyclical unemployment.

The effects of unemployment can be countless by the ripple effect it damages everyone no one escapes free of harm with unemployment. Unemployment affects the unemployed in such ways that it will be harder for them to find a job when they are branded as unemployed which leaves them unemployed for a longer period of time (causing chronic unemployment). When large numbers of people are unemployed it hurts the economy and businesses and this becomes a cyclical problem, a cycle because they have less money to spend and companies suffer. Affects their psychological well-being, an unemployed person after months of financial crisis become depressed, anxious and might lead them to a wrong path of criminality, were they see that they are forced to do this as their only option to gain money. And finally it marks the communities because an unemployed person has no source of income and they might have difficulty paying their mortgage, which results in a foreclosure. And foreclosed homes lower the values of the properties in the area.

There are many types of unemployment but within these the most important are: voluntary and involuntary unemployment: This type of unemployment can be divided by two; first the voluntary is caused by people who quit their job by their own decision. Obviously it can be by various reasons; it could be because they are tired of working there or they want to find another job that has a better paycheck. Secondly is involuntary unemployment, which is caused by workers who are fired or laid from their job. The other type of unemployment is frictional unemployment and it may be the most common because its the one that is seen the most. This type of unemployment occurs when a workers suddenly losses his job and this person starts looking around for a new one that can fit him, usually this search takes a while. This this time the person is now considered as unemployed. But a main characteristic of this frictional unemployment is that it only takes a short period of time and doesnt have a problematic from an economic standpoint. This frictional unemployment usually occurs on young adults that are looking for a job for the first time in their life. Also it occurs when women reenter the workforce after having a baby. Structural unemployment is caused when technology advances and workers are replaced with robots or machines. And finally cyclical unemployment, which is caused by budget cutbacks in businesses.

RESOURCES

http://economics.about.com/od/unemployment-category/a/Types-OfUnemployment.htm http://www.sciencedaily.com/releases/2013/04/130403200302.htm http://smallbusiness.chron.com/overall-effects-unemployment-37104.html http://useconomy.about.com/u/ua/economicindicators/unemployment-survive.htm http://www.termpaperwarehouse.com/essay-on/Why-Is-Frictional-Unemployment-ImportantTo/28883

http://www.brookings.edu/research/papers/2012/12/04-unemployment-insurance http://fxwords.com/u/unemployment-rate.html