es were to decline (keynesian, 2010). However, money wages are fixed by institutional datum (keynesian, 2010). Unemployment compensation is necessary to prevent further reductions in real output because consumption is based on current income receipts (keynesian, 2010). Keynesian theory implies that increases in unemployment compensation have a simulative effect on the economy (keynesian, 2010) (Hendrickson, 2010)
Recommend economic concepts or interventions that could be employed to correct unemployment
Unemployment cannot be terminated, but it can be reduced first by reforming our education system to the extent that in our education system to the extent that in addition to academics, hands- on skills become compulsory for all students. An improvement in the employability of the labour supply - so that the unemployed have the right skills to take up the available job opportunities. Policies should focus on improving the occupational mobility of labour (tutor2u, n.d.). Improving skills and reducing occupational immobility Policies should provide the unemployed with the skills they need to find re-employment and improve the incentives to find work (tutor2u, n.d.). Structural unemployment is the result of workers being occupationally immobile - improvements in education and training will increase the human capital of these workers, and therefore give them a better chance of taking the new jobs that become available in the economy An improvement in the incentives for people to search and then accept paid work - this may require some reforms of the tax and benefits system (tutor2u, n.d.) (limited). (limited) Economic dualism should also be dealt with, economic dualism is a situation in which one sector of the economy, for example, telecommunications is more advanced, while another, say agriculture remains undeveloped. It is imperative that the government and the rich start extensive farming in Jamaica and of course this can create employment opportunities for many youth. Lower interest rates so that many Jamaicans can feel free to borrow for our banks in order to create businesses, thus creating jobs for others. We should consume what we produce, thereby pumping money into local businesses, which will in turn expand their businesses to the point of employing more Jamaicans. (Durueke, 2012)
Reflating Aggregate Demand
The government can also use macro-economic policies to increase the level of aggregate demand (tutor2u, n.d.). These policies might involve lower interest rates or lower direct taxes (tutor2u, n.d.). It might also encourage foreign investment into the economy from foreign multinational companies (tutor2u, n.d.). In the diagram below we see an increase in aggregate demand leading to an expansion of aggregate supply. Because of the increase in demand for output, the demand for labour at each wage rate will grow - leading to an increase in total employment (tutor2u, n.d.). http://www.tutor2u.net/economics/content/diagrams/unemployment10.gif
Not every increase in demand and production has to be met by using more labour (tutor2u, n.d.). Each year we expect to see a rise in labour productivity (more output per worker employed (tutor2u, n.d.)). And, businesses may decide to increase production by making greater use of capital inputs (machinery and technology) (limited)
Crime, including violent crime, is a serious problem in Jamaica, particularly in Kingston and Montego Bay, two of our major industries and work cities. This issue needs to be addressed because unemployment contributes greatly to crime. When crime is addressed it will lead to more foreign investment and the expansion of industries.
Benefits of Applying the Economics concepts above…..
With the creation of jobs there will be a reduction in crime and violence as fewer people will be idling, thus making investors considering Jamaica as a place to invest.
By facilitating the entry of skilled people into the productive sectors of an economy, and enabling the economy to sustain or increase productivity and competitiveness in the global market place.
Putting more i