Question

3.5 During the 2007-2008 global financial crisis unemployment rates in many countries were at very high levels. By 2010 a number of countries were showing signs of economic recovery However, their rates of unemployment were remaining high, and in some countries the rates of unemployment were continuing to rise further. Why would the rates of unemployment remain very high or rise even further, even when these economies had begun to grow again GDP C+1+G+NX Discouraged workers - what are they doing? Will employers be quick or hesitant to accept that there is an upswing? Will they employ more people quickly, and invest in capital or wait until they are more confident? Will workers with jobs be keen to spend a lot of money? Will consumers be eager to spend more, or will they be cautious and slow to respond? What structural changes may have occurred in industries? Will the demand for labour be as high now? Will the same types of labour be required?

Answer 1

Discouraged workers are those who would prefer to be working but has given up on searching for a job. So they are not counted as active in the labor force.

The employers would be hesitant to accept that there is an upswing. They will wait until they are confident that there is a long term need for new hiring.

The workers with jobs would not be keen to spend a lot of money. The consumers will be cautious and slow to respond.

Structural change is a shift or change in the basic ways a market or economy functions or operates. In this case such changes can be caused by global shifts in capital and labor. After the speculative period for the employers gets over and they feel the need for new hires, the demand for labor will go up. It will also depend on the structural changes that has taken place in the industry. Again, the type of labor will also depend on the structural change that the industry has accepted.