The labor force refers to the total number of eligible employees. It comprises of employed and unemployed individuals in a country. Labor force participation rate includes a segment of working population between the age of 16 to 64 years in the economy who are seeking employment or are already employed. It evaluates the community of working age in an economy. Individuals who are above the age of 64 years, homemakers or are still studying are excluded in the labor force (Gangl, 2009). Unemployment rate evaluates the prevalence of unemployment in a country. The level of unemployment is high during periods of recession. The three measures deal with employment level in a country.
A price index is a standardized average of prices of specific services or commodities in a region over a given period. Producer price index evaluates the average variation in the sale expenses for the local market of services and raw goods. The commodities are purchased from the primary producers and bought by their fabricators themselves. Firms that are involved with product price index comprise scrap materials, construction, electricity, natural gas, forestry, fishing, agriculture and mining (Bellemare, 2015). Consumer price index is a significant measure of inflation in an economy. The consumer price index comprises of all imports made in a country. The two commodities relate because they both quantify fluctuation of prices for services and goods. The two values show the variation in the price of products produced in a country.
Structural employment results from mismatch resulting from the skills of the employee and the skills required for the job. It arises because some resources such as labor are configured for a specific technology, but the economy needs commodities and services from other technology. Employers seek employees who have one type of knowledge and skill and employees looking for employment have a different kind of ability. Skills mismatch results in unemployment of structural diversity (Sunkara, 2015). However, the government can use various strategies to reduce structural employment in a country. Fiscal policy can reduce the rate of work by helping to improve the aggregate demand and the rate of monetary growth. The government can increase government spending and cut taxes in the state. The monetary policy comprises reducing the rates of interest by lowering the cost of borrowing and motivate people to invest and spend.
Gross Product Represents the market value of all products produced in a country over a single year. It is a significant measure of macroeconomic presentation. It includes only the services and goods that have been made or generated domestically. It excludes intermediate goods and second-hand goods because it only includes products that add value to the inventories (Mayer, 2014). Second-hand assets are not included because no production activities are comprised apart from the sales service.
A gross domestic product does not describe the distribution of wealth. Majority of the population in a country do not benefit from high wealth because they do not have the finance to purchase most services and goods. It ignores externalities. Economic development is directly related to resources available. Due to overuse of the funds, there is an increase in opposing forces and social welfare reduces (Feenstra, 2015). A gross domestic product does not explain the commodities that are produced in a country. The products may have undesirable impacts on the social welfare of the members of the society.
Bellemare, M. F. (2015). Rising food prices, food price volatility, and social unrest. American Journal of Agricultural Economics, 97(1), 1-21.
Feenstra, R. C., Inklaar, R., & Timmer, M. P. (2015). The next generation of the Penn World Table. The American Economic Review, 105(10), 3150-3182.
Gangl, M., & Ziefle, A. (2009). Motherhood, labor force behavior, and women’s careers: An empirical assessment of the wage penalty for motherhood in Britain, Germany, and the United States. Demography, 46(2), 341-369.
Mayer, T., Melitz, M. J., & Ottaviano, G. I. (2014). Market size, competition, and the product mix of exporters. The American Economic Review, 104(2), 495-536.
Sunkara, V. M., Tapio, W. H., & Rao, P. S. (2015). Role of ICT in imparting the Youth with Skills, Training and Employment Opportunities to accomplish Human Development Challenges.