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Wednesday, June 1, 2011

ECO 403_GDB Solution


Unemployment is an economic problem as well as a social issue. It affects the living of all the people in a society whether they are young or old, educated or uneducated, skilled or unskilled. Why unemployment is increasing day by day in Pakistan? Write down at least one reason.

Answer:

Unemployment is increasing day by day in Pakistan due to many reasons. Reasons are job search and wage rigidity in the country.

  • Job search:

1. Workers have different abilities and preferences.

2. Jobs have different skill requirements.

3. Geographic mobility of workers.

4. Flow of information is imperfect.

· Wage rigidity:

1. Minimum wage laws.

2. Labor unions.

3. Efficiency wages.

· Sectoral shifts.

· Unemployment insurance (This is for European countries)

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