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Economics

Home > Economics > Economic issues > Economic issues in the Australian economy - Unemployment

Activity 1

1. What was the impact of the “technology sector boom” on the level of employment in the United States and Australia in the late 1990s?
   The technology boom in 2000 - 01 supported a global upswing in economic activity. This created an increase in the level of aggregate demand  in Australia and the United States leading to higher levels of economic growth. The level of cyclical unemployment decreased in response to these changes.
   
   
2. Outline the economic significance of the comment “the smallest gap between US and Australian unemployment rates in more than 12 years”.
   In late 2001 and during 2002 the “technology bubble” burst and corporate failures such as Enron and Worldcom in the US and HIH, Ansett and One. Tel led the Australian economy into a slowdown, although recession was avoided. This was followed by a lack of confidence in the stock market.
   
   In Australia structural reforms by the government in the labour market to improve international competitiveness have acted as a buffer against the global downturn. As a consequence, the downturn has had a greater the effect in the US than in Australia.
   
   
3. Explain why the Australian Treasurer was expecting unemployment to increase in 2010. Identify the type of unemployment expected and research what actually happened.
   The type of unemployment expected was cyclical unemployment due to global recession. In early 2010 the unemployment rate actually fell to 5.2% from 5.5% in December 2009 and then increased only slightly to 5.3% in February 2010.

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