Abstract
The aim of this paper is to discuss the problem of unemployment and long term unemployment in Australia. We shall discuss the causes of unemployment, the policies introduced by different governments to alleviate the problem, and the consequences of high unemployment. Some economists believe that unemployment is caused by a lack of aggregate demand, and the impact of structural and technological change on the labour market. The popular myths are that unemployment is caused by: high wages, inflexible labour markets, “generous” unemployment benefits, “unfair” competition from Asian low wage economies. However, unemployment rates in most OECD countries follow similar paths even though they have different institutional and policy frameworks. This suggests that unemployment is still a mystery to be explained. Finally, the paper discusses the serious consequences of unemployment for the unemployed, the families of the unemployed, and for the employed: mental and physical illness, increased crime and social problems, and loss of income. Given these high economic and social costs, why do governments allow unemployment to remain at such high levels?
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