Havemann, J., & Kempster, N. (1993, July 6). The case of the disappearing worker: What's gone wrong? Los Angeles Times, n.p.
What are the root causes of unemployment? Havemann and Kempster examine the growing phenomenon of fewer jobs being added to economies throughout the world even as the economies themselves are prospering. The causes for unemployment are thought by some to be attributable to increased productivity: as machines improve to the point that they require fewer and fewer workers while producing greater volume, businesses find that they need to hire fewer workers.
This view is not shared by many economists and other analysts, who hold that the problem is not productivity, but rather high minimum wages and benefits. Nations that have high minimum wages and non-wage benefits (holiday and sick leave, for example) may find that it is more expensive to hire workers in that the workers cannot produce more than they receive in compensation. At the same time, generous unemployment benefits in these same nations make it attractive not to work, further adding to unemployment. These nations also suffer from relatively high tax rates since fewer workers have to support the generous benefits offered by the government.
Although the leaders of industrialized nations could take steps to change this situation, the political environment renders it unpopular for them do to so, with the result that no change is likely in these areas for some time.
Bernstein, A., Konrad, W., & Therrien, L. (1992, August 10). The global economy: Who gets hurt? Business Week, pp. 48 53.
Increased international trade is good for the economy, according to traditional economic theory put forth originally by Ricardo in 1817. Economic advantage found in one nation gives it a competitive edge in producing some goods, while other nations have similar edges in other products. International trade should result in the aggregate cost of goods...