Unemployment: Study of Causes and Possible Solutions

TL;DR

This paper analyzes unemployment causes and proposes multi-term solutions, including income support, investment in long-term projects, and abandoning competitive models, supported by macroeconomic theory and Argentine case studies.

Contribution

It introduces a comprehensive multi-term approach to unemployment, challenging current liberal policies with rigorously demonstrated alternative proposals.

Findings

Income support can be financed by increased production.

Long-term investment projects can reduce unemployment.

Abandoning competitive models may improve employment outcomes.

Abstract

The following measures against unemployment are proposed: In the short term, to promote greater income for the poorest sectors. It is shown that this can be paid with the resulting increased production, without losing income to the other economic agents. In the mid term, the creation of ad-hoc companies for investment in projects profitable but long lasting. And in the long run, the abandonment of the competitive models. As these proposals go against current ideas (liberalisation, labour market flexibility, free market, etc.), the statements are rigorously demonstrated, even at the risk of making the lecture harder. Part 1 explores the problem and uses a simple model and others heuristic arguments to create familiarity with macroeconomic models. Part 2 is a simplified summary of Macroeconomic Theory textbook. It serves as a review to the reader whose knowledge in economy are out of date, or as a first approximation to the topic if he or she does not have them. In the light of the theory, economic policies are evaluated for the Argentine case in the 90's. The work accepts the Keynesian explanation of unemployment (insufficient demand), but we disagree on its solution (public expenditure). Finally, in Part 3 we elaborate and justify the proposals.