What steps have governments taken to solve the problem of employment Essay

What steps have governments taken to solve the problem of employment since 1980 and how effective were they - Essay Example loyers are willing to offer and what workers are willing to accept explains why United Kingdom unemployment is so much higher than in the United States, where taxes and benefits are considerably lower. The interaction between the welfare state and a changed economic environment, Krugman argued, can also explain why unemployment has increased so much in United Kingdom. The change he emphasized was declining demand for low, skilled workers in industrial nations. Such a change would tend to increase income inequality by depressing the wages of low-skilled workers. But large disparities in incomes are what the United Kingdom welfare state was designed to prevent. The collision of market forces pushing toward greater income inequality with government policies that prevented such inequality has resulted in growing unemployment in United Kingdom, especially among low-skilled workers. In analyzing the reasons for declining demand for these workers, Krugman expressed skepticism about the importance of increased competition from newly industrializing nations. Although intuitively plausible, this explanation has been found to have little empirical support according to Krugman. Instead, he at tributed the declining demand for low-skilled workers to technological change that devalues the market value of manual labor. The same forces raising unemployment in United Kingdom, Krugman claimed, have caused rising poverty and income inequality in the United States. With less generous social service benefits, low-skilled workers in the United States have seen their real incomes decline. Krugman did not see any painless way out of the tradeoff between more poverty and more joblessness. Transforming low-skilled workers into high-skilled workers through improved education and training might seem the obvious solution. But raising education levels can be done only gradually, and government training programs are not particularly effective. Some modest improvement in United Kingdom might