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Unemployment essay graphs?

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jando:
Hey,

I was just wondering which graphs would be the most appropriate to be included on an essay on causes of unemployment in Australia and recent trends.
Would the NAIRU be relevant for an essay on this topic?

Thanks.

steviemay2000:
You could include a production possibility frontier t show how the economy would be operating below its full capacity.
A philips curve is also important in relation to unemployment - it demonstrates the relation between unemployment and wages - higher unemployment means excess of labour supply meaning a fall in wages.

steviemay2000:
Sorry I just realised you said the question is based on 'causes' of unemployment as the other graphs I mentioned are more for the 'effects' of unemployment.
In terms of causes, you'd want to talk about cyclical and structural causes. Cyclical refers to a downturn in the business cycle. This is greatly impacted by macroeconomic policys so you'd want to mention how the stance of fiscal/monetary will impact economic growth and hence unemployment (because remember demand for labour is a derived demand)... so in this case you could draw a graph based on the effects of fiscal and monetary policy.

Structural unemployment refers to changes in patterns of production e.g. closure of Australian car industry - I'm not sure however what graph you could use for this

JTrudeau:
Adding on, just because the question asks about the causes doesn’t mean you can’t use the graphs above. As part of the explanation of the causes, you’d have to go through basic definitions and explanations, and also talk about the effects of unemployment (tying it into recent trends).

The Short Run Phillips Curve (trade off between unemployment and inflation) and Long Run Phillips Curve (trying to reduce cyclical unemployment beyond NAIRU) can both be used in conjunction with discussion about cyclical unemployment or trends.

The Keynesian Deflationary Gap (see the Diagrams Compilation post I made on this board) can also be used to show how unemployment exists macroeconomically.

The diagrams don’t have to relate exactly to the causes, as long as you can tie it in to something relevant :)

jando:
Thank you, this was a big help :)

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