MACROECONOMICS ASSIGNMENT

Q. Ways to increase job creation and bring down unemployment:

Ans: Active labour market programs, such as vocational training programs designed to increase the
demand for labour by lowering its cost to firms through wage subsidies and search and matching
assistance programs aimed at reducing frictions that prevent demand from meeting supply in the
labour market, have been tried by government for solving the problem of unemployment however,
the extent to which it is effective is way less than expected. The cost of these programs is way more
than the increase in income in most of the cases. However, the government is under constant
pressure from the government to help with employment, therefore they continue with these
policies. Other potential policies according to researchers in this field suggest working more on
policies to foster labour demand, and helping workers access different labour markets by removing
barriers to their moving across job sectors and to different locations.

The extent to which automation does occur in a country would depend heavily on the country’s
capacity to absorb technology, the skill of its workforce, the ability to mobilize resources for large
capital investments, the capacity for maintenance, and attention to tolerances that may make it less
easy to substitute away from labour. And the likelihood of developing the kinds of upgraded jobs
that are necessary complements to automation would appear to be lower in countries with a weak
educational base. And hence, it would be necessary to come up with policies to educate the masses
based on the kind of jobs available.

There is should be more focus on policies that encourage innovation. Innovation policy when
effective in leading to an increase in innovation activities and successful innovations, even through
imitation, can also be an important policy for increasing employment in the short run.

Technology has disrupted the world in a positive way. Online job portals generate big data useful in
analyzing labour markets and the demand for job skills. This could be tapped by the policy makers to
determine the development of labour market policies and analytical knowledge, including observing
job-search behaviour, improving skills matching, and projecting demand for workforce skills.

Work towards improving the ease of doing business in India index and slowly work towards
improving the same factors in all the major cities of India and not just, Mumbai and Delhi so as to
increase opportunities for wage employment, by allowing existing firms to expand and to create new
jobs and encourage firms to graduate, such as better-regulated taxes and access to infrastructure.

Policies to encourage more participation of women in the labour force by finding ways to resolve the
motherhood penalty which is an important factor in women’s decisions to enter or stay in the labour
market by providing affordable, high-quality child care and ensuring that women have access to safe
transportation. Change in norms often follows strong policy interventions and as family policy across
the world has shown, norms and behaviours respond well to incentives. It is important for the
government to portray women as a more capable version of themselves and hint at a more enabling
vision in different ways. Campaigns should be done to portray that women are valued as workers
and project an image of child care as a shared responsibility in the home are likely to remove some
of the guilt that women often experience when they leave children behind to go out to work. Such
campaigns have been effectively used in India and elsewhere to encourage literacy, to achieve
health outcomes such as immunization or family planning, or to enroll participants in social
programs such as conditional cash transfer schemes.