Question

2. "The unemployment rate is the share of the labor force that is jobless, expressed as a percentage. Unemployment is a major problem in most of the economy across the world." a) Discuss the impact of minimum wage rate on unemployment b) Discuss four types of unemployment.

Answer 1

a. A minimum wage is the lowest remuneration employers can legally pay to their employees the price floor below which workers are not allowed to sell their labor. Although in many jurisdictions minimum wage laws are in place, there are differences of opinion on the advantages and disadvantages of a minimum wage. Minimum wage supporters say it increases workers ' living standards, decreases poverty, eliminates inequality, and improves morality.In comparison, critics of the minimum wage argue it raises inequality, increases unemployment because some low-wage workers "will be unable to find work will be forced into the ranks of the unemployed"and damage companies, because excessively high minimum wages allow businesses to raise their product or service prices to accommodate the extra cost of paying higher wages.

b. Frictional unemployment is a sort of unemployment that happens when people are either "between employers" or searching for their first work. It's a sort of unemployment which occurs when the economy tries to match people and jobs properly. So, you're frictionally unemployed if you get fired for poor work, if you quit because you don't like your job, or if you're just looking for your first job.
Seasonal unemployment occurs when people do not work and only at certain times of the year their jobs exist. Sources of this form of unemployment are farm and construction workers.

Structural unemployment occurs when there is no longer a need for a certain set of skills in a particular society. For example, most people who worked with horses were structurally unemployed as cars became widespread in the United States. Many workers working in manufacturing in the U.S. today are structurally unemployed now.
Finally, there is cyclical unemployment, the worst kind of which economists say. People are out of work in this kind of unemployment because the economy has slowed down and there is no demand for anything that the workers do. In recessions, this kind of unemployment occurs.