Positive effects of unemployment? (1 Viewer)

#RoadTo31Atar

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Does anyone know what these are, if any?

All I can think of is the incentive effect and lower inlation.
 

blyatman

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Correct me if I'm wrong, but generally speaking, I believe countries want a low but non-zero amount of unemployment. Zero unemployment means little opportunity for growth, since businesses have nobody to hire and need to poach people from their current employers. Having a small level of unemployment means that there's room for businesses to grow, as well as opportunities for people to start new businesses.
 

BLIT2014

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Look into natural rate of unemployment concept, it should help you out.
 

#RoadTo31Atar

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Correct me if I'm wrong, but generally speaking, I believe countries want a low but non-zero amount of unemployment. Zero unemployment means little opportunity for growth, since businesses have nobody to hire and need to poach people from their current employers. Having a small level of unemployment means that there's room for businesses to grow, as well as opportunities for people to start new businesses.
Look into natural rate of unemployment concept, it should help you out.
I agree with you guys about NAIRU and unemployment being bad bcuz underutilised resources, lower standards of living, decreased real incomes, higher tax burden, etc. But, teacher says we HAVE to mention the positives as well as negatives.
 

BLIT2014

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Short-run Phillips curve is roughly L-shaped to reflect the initial inverse relationship between the two variables. As unemployment rates increase, inflation decreases; as unemployment rates decrease, inflation increases.

Source:https://courses.lumenlearning.com/boundless-economics/chapter/the-relationship-between-inflation-and-unemployment/#:~:text=However, the short-run Phillips,unemployment rates decrease, inflation increases.&text=As unemployment decreases to 1,inflation rate increases to 15%.

If you have access to the Riley textbook, it should have information about the benefits? I'll try to find mine to see if this is the case.
 

#RoadTo31Atar

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Short-run Phillips curve is roughly L-shaped to reflect the initial inverse relationship between the two variables. As unemployment rates increase, inflation decreases; as unemployment rates decrease, inflation increases.

Source:https://courses.lumenlearning.com/boundless-economics/chapter/the-relationship-between-inflation-and-unemployment/#:~:text=However, the short-run Phillips,unemployment rates decrease, inflation increases.&text=As unemployment decreases to 1,inflation rate increases to 15%.

If you have access to the Riley textbook, it should have information about the benefits? I'll try to find mine to see if this is the case.
Ok thanks, I'll just write that if a question similar to that is asked.
 

Kangaaroo

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A little bit of unemployment is necessary otherwise we would get inflation (as predicted by the Phillips curve). It also means there is a pool of labour for firms to select from - if there was no unemployment it would be more difficult for firms to employ new people.
 

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