MEASURING UNEMPLOYMENT USING PRIMARY RESEARCH 10
MEASURINGUNEMPLOYMENT USING PRIMARY RESEARCH
Accordingto Bodden (2013, p.45), primary research consists of original datathat is collected by a researcher. It is mainly used after aninvestigator has obtained understanding of an issue by reviewingsecondary research or by analyzing previously collected primaryinformation. An example is when the government wants to establish thelevel of satisfaction with its services with the public and issuesquestionnaires asking if people are happy or not and if not, theiropinion on how best o improve government operations.
Themajor advantages of primary research include the ability of theresearcher to focus on both qualitative and quantitative issues. Inaddition, there is the benefit of controlling the research design tofit him researcher’s needs. Control enhances the ability to monitorhow the data is collected by determining several aspects such assize, period and the goal of the project (Lindzey 1965, p.44).
Amongstthe disadvantages, include the cost of obtaining primary data.Compared to secondary data that is readily available, primary data isrelated to traveling costs and other costs related to production ofdata collection materials. Further, obtaining the data requires theexecution of a research plan. The execution takes time to implementto the extent that it may be outdated by the time it completes.Finally, the researcher does not have the assurance of obtaining therequired response rate. As a rule of thumb, researchers are alwayspessimistic and expect a low response rate (Lindzey 1965, p.44).
Employmentis defined as the act of having paid work, a person’s profession,or the action of giving someone work. Alternatively, unemploymentoccurs when someone who actively searches for employment is unable tolocate a place to work. The rate of unemployment is used to measurethe health status of the economy. To be classified as unemployed, twocriteria is used. First, someone must have no work, and they musthave been actively searching for work. Those who have no work andhave not been actively seeking are considered to be out of the laborforce. They include people who do not desire employment. People whoare out of employment normally, have the desire to look for work thatis signaled by efforts to find employment for the past one year.However, those out of the labor force have given up since theybelieve there are no jobs available. They can also be referred to asdiscouraged workers (Pigou 1914, p.33).
Therate of unemployment is obtained by dividing the number of unemployedpeople by the number of people in the labor force. In the UnitedStates, the most commonly reported unemployment rate is 8.1. It wasreported in August 2012 and represented the number of people who hadno job but were available to work. In addition, they indicated tosearch actively for work for four weeks before the survey wasconducted (Lindzey, 1965, p.44).
Peoplecan be unemployed for many reasons. First, there are people who quittheir jobs and in the process of looking for another job, they becomeunemployed. Second, there are people who are laid off from workbecause of a downside in the economy, as they wait for the economy torecover so they can be rehired, and they become unemployed. Finally,when the need for people’s skills declines and, as a result, thereare limited positions available which demands them to gain new skills(Pigou 1914, p.33).
Thereare different types of unemployment. First is the frictionalunemployment. This unemployment results when people are finding orchanging jobs. For example, people begin applying for work aftergraduation. The time it takes for them to find a job causesfrictional unemployment. Second is structural unemployment. It isresults when there is a mismatch of skills in the labor market. Thereare several reasons behind structural unemployment. They includeoccupational immobility that is caused by the difficulties thatpeople face while they learn new skills that are applicable to thenew market, and due to technological changes that may render someskills as irrelevant. Further, Geographical immobility refers to thedifficulties involved in moving to a new location to find a job.Finally, technological change that results due to improved technologyoften reduces the demand for labor.
Thirdis classical or real wage unemployment. It is caused when the realwage is pushed above the minimum, for example, when trade unionsdemand a higher wage. As a result, employers cost of labor increasesforcing the employers to lay off some of their labor to maintaintheir original cost of labor.
Fourthis voluntary unemployment that is as a result of people voluntarilyagreeing not to work. It occurs when the government gives generousbenefits. Some people prefer incentives to formal work (Miner1983,p.22).
Finallyis the demand deficient unemployment. It is also referred to as thecyclical unemployment. It occurs when demand in the economy fallsbelow full capacity. As a result, the output of the firm declines andcauses the revenue to fall too. The employers in the economy areforced to reduce their costs to remain competitive. They hence reducetheir labor force by laying off workers (Seabrook 1982, p.111).
Accordingto Healey (2004, p.33), various policies on how a government canreduce unemployment exists. First is the use of monetary policies. Agovernment can use the money to stimulate the economy. When there ismoney in the economy, the interest rates on borrowing tends todecline. As a result, families can borrow money to buy the items theywant. The increased borrowing stimulates demand that reinstates theeconomy. In addition, businesses can borrow cheaply to increaseproduction so they can meet the increase in demand. As a result, theyhire more labor and reduce the unemployment rate. This method ispreferred due to its rapidity in stimulating demand (Lawrence 1922,p.55).
Secondis the fiscal policy. This method is advisable to use after themonetary policy fails because it is also slow. However, it is moreeffective, and its effects are long lasting since it providesconfidence that the government will stimulate the economy. It is thefaith that encourages people willingness to spend in the present fora better future. The policy calls for the government to use taxes andgovernment spending in order to stimulate demand. The government isfaced with two options, either to reduce its taxes or to increase itsexpenditure (McLaughlin 2002, p. 45).
Accordingto Frenkel (1988, p.34), there exist different opinions on the bestsolution for unemployment. First, there is an argument that not allfiscal solutions are created equal. The methods are evaluated on adollar-to-dollar basis to define which method creates more jobs.According to research, the most practical solution involves theprovision of construction jobs followed by unemployment benefits andfinally, funding education. Tax cuts are regarded as the leasteffective methods of creating employment.
Accordingto Amherst, the most popular fiscal stimulus is tax cuts. Never theless, they are the most cost-ineffective methods. An illustration ofUnited States’ tax cuts is given. One billion dollars in tax cutscreated only 10, 779 jobs. The reason is that only half of the moneywas received by the workers. The remainder was either saved or usedto pay down payment for loans. Funding construction works gives thebest result. One billion dollar spent creates 19,795 constructionjobs. Second, investing in education calls for the government to hireteachers and creates 17,687 jobs. The project had an addition benefitthat added an extra 1.3 billion into the economy. Further,well-educated people can get well-paying jobs for themselves and canbuy more items from their high salaries (Lingens 2006, P. 45).
Incontrast, when the government reduces taxes, it creates a similar buta more direct effect to that produced by reducing the interest rates.The approach gives consumers more money for their spending needshence increasing the demand. In addition, it also cuts the costs forbusinesses hence they end up having extra money for investment. Whenbusiness activities increase, they hire additional workers. When thegovernment spends, it usually takes the form of job programs. Itstimulates the same reaction as a tax cut that provides more cash tothe consumers to buy the extra things they need (Lingens 2006, P.48)..
Whenevaluating the different options for fiscal policy, not all solutionsare created equal. In terms of the dollar to dollar analysis, thebest approach creates the most jobs. Several researchers haveindicated that the most cost effective solution involves providingconstruction jobs for the unemployed. It is followed by unemploymentbenefits and finally, funding education. Government spending ondefense is ranked as the least effective method of reducingunemployment (Lingens 2006, P. 48).
Taxcuts are the most common fiscal approach to reducing unemployment.However, the reduction in taxes makes it the most cost-ineffectiveapproach. An example of Tax cuts by the United States governmentinvolved one billion dollars. The approach resulted in the creationof only 10,779 jobs. The reason behind this is that only half of themoney that was paid to workers was spent in buying goods andservices. The remainder is recorded to be used in the settlement ofdebts. It is of more benefits when the government provides businesstax cuts in payroll. The approach creates 13,000 new jobs for every 1billion dollars. The best industry that should receive the payrolltaxes is the small business sector. It is because the small businesssector controls 65% of new jobs (McLaughlin 2002, p. 56).
Governmentspending in construction provides the biggest return in terms ofjobs. The spending by the United States government of 1 billiondollars created 19, 795 jobs. The second best approach is aninvestment in education. The US government created 17, 687 jobs foreach dollar spent on education. Further, education has an additionbenefit to the economy, which added 13 billion dollars. People thatare more educated can get better jobs. In addition, they can spendmore on items from their high income. Government spending on defenseis ranked as the least effective method. It only creates 8,555 newjobs for each one billion dollars invested. Defense is more capitalintensive and specifically in modern times, it highly relies on animprovement in technology that reduces the amount of workforcerequired (McLaughlin 2002, p. 85).
Unemploymentbenefits are the second most effective approach to reducingunemployment. The government provides benefits to the unemployedpeople. The approach creates 19,000 jobs for each and every billiondollars invested. The cause for its effeciency is that the unemployedtend to spend all the money they get for their basic needs. Basicneeds include clothing, groceries, and housing. As a result, theyincrease demand on the market products. Whenever the demand for goodsand services increases, it prompts the businesses to increase theirproduction rates through increasing their workforce. Hence thegovernment only distributes the money but it goes back to the economyand more jobs are created (McLaughlin 2002, p. 87).
Furtherarguments for creating the fiscal stimulus involve the use of idleresources. The government should use idle resources to reduceunemployment. Resources are classified as idle if they are not to beused by the private sector. It is argued that the use of employeesand equipments that would be used by the private sector is of no use.It is described as harmful if the private sector has more promisingfuture prospects than the government. The government causes acrowding effect by denying the private sector the most importantresources for survival. The government is hence advised to take greatcare whenever it wants to pursue this approach. The stimulus shouldbe designed to target industries and geographic areas that contain alot of idle resources. For example, the government can open a closedautomotive plant and rehire the laid off staff. However, it isdifficult to target and economic stimulus so precisely, there willalways be spillover effects of the stimulus. Further, it is necessaryto take into consideration that the type of stimulus chosen bypoliticians is likely to be political than an economic one. Itincreases the chances that a stimulus that is politically popular butineffective is chosen over the effective but non-political popularstimulus to (Frenkel 1988, p.34).
Insummary, primary research is a superior method of obtaininginformation. It grants the researcher the advantage to control theoutcome of the research. Amongst the options, include the ability tomonitor collection of data and determine the size and the goal of theproject. The major disadvantage is that it is time consuming and thefindings might be outdated by the time the research is completed.
Unemploymentoccurs when someone who actively searches for employment is unable tolocate a place to work. A big difference exists between theunemployed and the persons who are unwilling to work. Unemploymentgives individuals the desire and efforts to find a job. The rate ofunemployment determines the health status of the economy. There arevarious types of unemployment. They include frictional, demandrelated unemployment, classical or real-wage, voluntary and demanddeficient unemployment
Economistshave developed various policies intended to help them reduceunemployment. They include both the monetary and the fiscalapproaches. Monetary approaches involve the government controllingthe interest rates on loans offered by banks to stimulate peoplespending and hence demand. It is the top kind of approach for thegovernment. It has a fast reaction on the economy.
Fiscalpolicies involve either the use of taxes or government spending. Theapproach is said to be relatively slow compared to the monetarypolicy. However, its effects are recorded to be long-lasting in theeconomy. Government spending is the best approach to fiscal policiesby the government. It causes the greatest increase in jobs per onebillion dollars invested. The various forms of government spendinginclude Spending on construction, benefits allowances to citizens,spending on defense and education.
Governmentspending on construction ranks as the most effective course ofgovernment spending, followed by spending on education, benefits andallowances to citizens and government. Government spending on defensehas been rated as the most ineffective approach. The approach iscapital intensive and involves technology, which reduces the numberof workforce required.
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