Unemployment

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After school, graduates enter the labor market to search for employment. They increase the unemployment rate making it go beyond natural employment. According to the survey U.S rate of unemployment is 5.6% its natural rate is 5% while the labor participation rate is 62.6%. In the U.S economy the rate of unemployment there is higher than natural unemployment. It due to cyclic rate of unemployment that the country experiences a higher unemployment rate than the natural rate. Such unemployment mostly happens when the country is in a recession. And during this period the level of production is less than full employment. The Gross domestic product of a state always depends on the level of output which depends on the rate of employment. When fewer people are employed there is less production taking place in the economy which results in less output thus GDP decreases. When the government employees more people, production increases which increases GDP. When people stay in the labor force for a long time, some of them get discouraged, and they stop searching for jobs. They end up being excluded from the labor force and statisticians classify them together with the unemployed individuals.
Unemployment exists because structural and frictional unemployment is always positive. It is not possible for a country to full control unemployment rate instead the government should try to minimize by ensuring that the unemployment rate is below the natural rate of unemployment.

It should start new projects that will provide employment opportunities for graduates to reduce the time they stay outside looking for jobs. They should lower cut taxes, especially to production firms so that they can hire more people from the economy thus reducing the level of unemployment (Tobin, 1995).

Work Cited
Tobin, James. “The natural rate as new classical macroeconomics.” The natural rate of unemployment: Reflections on 25 (1995)