Participation Rate And Full Employment example essay topic

Employment Levels Regardless of where we are, unemployment occurs and has since became an issue in our everyday lives in which governments have constantly implementing policies to tackle such problems. Employment does not only refer to the labor market, but also in the allocation of scarce resources into its most efficient uses. Full employment occurs when all unemployment is frictional, seasonal, or structural and there is no cyclical unemployment or at it's minimal. At full employment, real GDP is at potential real GDP or the natural rate of output. It simply means what is produce is at its peak or the ability at which a country is performing at.

However, full employment does not mean low unemployment in the labor sector. One of the best reasons might be the process of change that creates frictions and dislocations, which is beyond control, a sign of positive indication our modern society. People are entering and leaving the labor force in search of jobs which best suits not only themselves, but also employers seeking the right person for the unfilled jobs. Another reason might be changes in the players, structure and direction of the economy. This might be best explain by changes in the ownership of capitals that may lead to transformation of companies' way of doing things, the organizational culture, and also forecasting its goals and direction which indirectly affects employment. Therefore, policies executed in order to achieve full employment have to achieve a balance in all facet of the economy.

In order to achieve a full employment, human resources are inevitable in order to get things working the right way. However, the working age population (aged 15-69 years) does not indicate everyone are employed and utilized. One main index that determines the state of the labor market is labor force participation rate, labor force (people who are active) as a percentage of the working age population. Source: web Participation rate in the USA increases from 1990 to 2001.1990-1999 shows a high increase in participation rate of 13.5 million (125.8 mil-132.3 m). By referring to the GDP graph in figure 3.1, it illustrates a steady increase in the gross domestic product of USA. This may be due to increase in personal consumption expenditures and government consumption expenditure in particular federal defense spending.

As a result, production in the industry increases requiring higher amount of labor than before, resulting in increment of participation rate. However, statistics indicate that participation rate suffer a declining increase of 1.6 million (139.3 mil-140.9 mil) from the year 1999-2000. Referring to figure 3.1 again, the USA GDP graph pointed out a declining increase in GDP growth. This may be a sign of the country experiencing a recession at this point of time and much of this may be contributed by infamous the September 11 attack on the World Trade Center. Increase in the participation rate in the USA might also largely due to the increase in the number of women entering the workforce.

In the past 10 years, it sees the USA in mass production such as in the information technological sector, which sees more jobs available to women. Another interesting factor may be because of the percentage of women (50.9%) that is relatively higher than their male counterparts in the year 2000. From the above findings, it can be said that participation rate and full employment otherwise known as potential real GDP is directly related for most of the time. Theoretically, the increase in production without doubt requires to a certain extent a higher demand of workers in the labor market.

Source: web.