Different measures. Regional differences and difference in skills. 8.0% in UK. Beveridge definition of full employment- 3%. Also comparing with vacancies. Govn now ensures that people are seeking for work. UK had 0.9% unemployment in 1960 and increased immigration.
0-unemployment + no expansion available, causes inflation.
Full employment - no. of vacancies = no. of people out of work.
Arguments for regional policy
1. The failure of market forces - markets will not work quickly, more clever people will move leaving even worse situation behind
2. Cumulative decline - history of trade unions discourages new firms to enter
3. Inflationary pressures if national measures (e.g. fiscal policy) are taken
4. social costs also included (unlike in the case of private firms)
1. Inefficient units of production
2. Destroys comparative advantage
workers to the work - relocation grants. Congestion in popular areas, people left behind become worse off.
work to the workers - very expensive, not effective in terms of multiplier.
Unemployment is with world-wide pattern. One nation cannot step out. USA has less because tax cuts and budget deficit(Japan too). (West) Germany and France have very high unemployment.
Fiscal policy(reduce tax increase spending), monetary policy(lower interest), Incomes policy(to restrain inflation while using fiscal), protectionism to prevent import workforce(against Japan as well). Keynes' blame for 1930ies. Ideas of labour and liberals. Edward Heath was last prime minister in 1979 to support this (conservative, but used demand management. Big disagreement with Thatcher).
2. Increase in structural and frictional unemployment - rise in social security benefits, harder to make people redundant
3. International aspects - too high exchange rate and USA depression. To fight against use protectionist measures.
4. Oil prices-(4x in 1973, 1978) unemployment and gold price rocketed
6. Government policy - main aim is inflation
7. Pound rising unemployment rising