Labour Supply, Mismatch and Unemployment

One of the most important economic policy goals in many countries is to reduce the rate of unemployment. This assumes that the rate of unemployment represents the condition of the labour market accurately, or that the rate of unemployment is a good indicator to show the labour market condition. Tachibanaki (1987) pointed out that the rate of unemployment is not a good indicator to represent the labour market condition in Japan for various reasons. One of the most important reasons was the existence of the discouraged worker effect, in particular for females, which signifies that a large number of workers retire from the labour market in a recession. They are not counted as unemployed but as ‘not in the labour force’. These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.