Unemployment Essay

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QUESTION 1: Causes, solutions and consequences of unemployment. Unemployment Unemployment (or joblessness) occurs when people are without work and actively seeking work. Unemployment is often used as a measure of the health of the economy. The most frequently cited measure of unemployment is the unemployment rate. This is the number of unemployed persons divided by the number of people in the labor force. Causes of unemployment 1. High population growth rate: Rapid population growth rate in Kenya is generating rapid growth in the labor force. Such a high population growth rate is incompatible with the available arable land in the rural areas. Hence, people tend to migrate in the urban areas in search of jobs. This aggravates unemployment in the urban areas. This problem can be overcome by reducing the high population growth rates using methods used to control population growth. 2. Capacity Under-utilization: Most firms tend to produce below their capacity, thereby not employing as many people as their capable of. This arises due to lack of sufficient demand of their products. It can also be because of monopoly practices that limit output. This can be solved by expanding markets through, for example, export promotion and control of monopoly. 3. Seasonal nature of labor demand: Demand for labor in rural areas is mostly seasonal. This is made worse by the general ignorance of the existence of jobs elsewhere as well as by occupational immobility. This creates problems of underemployment and disguised unemployment. The problem can be solved by modernizing agriculture and ensuring continuous production throughout the year. 4. Use of inappropriate technology: For developing countries, this is the situation whereby industries continue using relatively capital-intensive methods of production instead of labor-intensive ones. This is caused by relative

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