(Chosen excerpts by Job Market Monitor) – Political discussion over the current government’s economic record centres on Australia’s unemployment rate of 5.5%. As some commentators have noted, this is better than the average of the last three decades for Australia.
Nonetheless a reasonable person might well ask how 5% of the labour force being unemployed could be viewed in any way as acceptable, regardless of the average over a significant period of time.
The answer lies in the long-running influence of some conventional economic propositions on the way we look at unemployment and how these propositions inform discussion about what full employment means.
I would add also that none of these propositions are beyond question. I believe they should be held up for scrutiny.
Exactly what is full employment?
More than anything else in the last hundred years, explanations of unemployment in capitalist economies and the related notion of full-employment have been at the heart of debate in macroeconomics.
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