Unemployment Rates and Human Capital; G.D.P. and Recession
Unemployment Rates and Human Capital
An increase in the minimum wage in the United States can have detrimental impacts on the country’s deteriorating unemployment rate. A rise in the minimum wage in American might create a trade-off between the higher rates of unemployment and, a higher wage for the employees (Siegel, 2002). The creation of the trade-off is likely to increase the cost of recruiting new employees to the existing United States private organisations. According to the available empirical evidence, the need for labour is more elastic when the capital and labour are easily substitutable.
Based on the current trend on elasticity of labour demand, earning a college degree can facilitate an increase in employability and lifetime earnings. College degree prepares an individual for an integrative and well-rounded lifestyle. The current elasticity of labour demand also requires professionals with adequate skills of producing high quality services at a relative low price. A college degree is also a reliable signal to the employer that an individual has the required skills and experience of meeting the needs of an organisation. A professional with a college degree also has the ability of acquiring a well paying job with limited challenges. Recent studies further affirm that, a college degree helps in opening opportunities for gainful employment throughout individuals live. A college degree is also valuable in helping an individual to remain employed for a long time through negotiating for high benefits.
G.D.P. and Recession
The country’s GDP (Gross Domestic products) is the market value of official services and goods in the country within a given time. In most instances, a country determines its GDP in a span of one year. The country GDP is useful in determining the living condition of its citizens (Coyle, 2014). High GDP is an indication of systematic growth and development of the country’s economy. In calculating a country monthly GDP, economists examine the value the products and services produced in a given month by comparing them with the value of products produced in previous months. Some of the items used in calculating the country’s monthly GDP include the assessment of internal and external sales of products such as automobiles foods and cash crop products.
Recession is the unexpected contraction of the business cycle. Modern scholars describe recession as the continuous slowdown of the country’s business activities (Moore, 2002). In most instances, recession results to an increase in price of macroeconomic indicators of the country’s GDP. Recession in a country emerges due to decrease in the spending of the available products and services. External trade destabilization, a financial crisis, and huge supply shock are some of the factors that trigger the drop in the spending of the country’s products.
The government can respond to the recession by altering its fiscal policy. The state needs to formulate a regulation that will increase the spending on the available resources and lower the taxes of the available products and services. The reduction in taxes will be useful in increasing the money circulating in the economy. The increase in the money supply can be facilitated by buying government’s security and reducing the interest rate. The government also need to respond to the recession by adopting a policy that will convince people to utilise the available resources. The government should also implement an expansionary policy. The macroeconomic expansionary policy will be useful in advancing the amount of money in the economy hence increasing the consumption of the available products and services. Therefore, any plan that would result to the increase in the money supply will be useful in dealing with recession outcomes in modern economy
Coyle, D., (2014). GDP: A Brief but Affectionate History. Princeton, NJ: Princeton University Press
Moore, G. (2002). Recessions. New York, NY: Library of Economics and Liberty
Siegel, J. (2002). Stocks for the Long Run: The Definitive Guide to Financial Market Returns and Long-Term Investment Strategies, 3rd, New York: McGraw-Hill
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