Unemployment Rates In Usa

By Author: Sherry Roberts
Total Articles: 81
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Introduction
The aim of the paper is to explore trends in unemployment between USA and Canada. The unemployment trends will be compared in relation to changes in population and real gross domestic product. Unemployment is a critical economic and social indicator that is used to measure the welfare of a society. Unemployment has numerous negative impacts on the society. It reduces the spending power of the citizens and reduces saving thus affecting adversely the overall performance of the economy. Persistent increase in unemployment affects other factors of the economy including health care costs, standard of leaving and per capital income. In addition to these effects on the economy, unemployment directly or indirectly affects various aspect of life expectancy. In order to describe the trend of unemployment in the past eleven years, the researcher obtains data from the International Labor Union and USA census Bureau. The data is analyzed using Spss Version 20 and excel analysis toolpack.
Results

Descriptive analysis
RESULTS
Descriptive analysis
The USA mean unemployment rates for the 11 ...
... years is 6.4 % that is slightly lower than Canada mean unemployment rate (6.8%). However, USA has the highest standard deviation indicating that the unemployment rate in USA has undergone a large change since 2000. In 2000, the unemployment rate in USA was 3.9% compared to Canada’s 6.3%. In 2011, the USA unemployment rate was 9.4 compared to Canada’s 7.0%. The two countries recorded the highest unemployment rates between 2009 and 2010. This period coincide with the global economic crises.

Trends in unemployment rates

Trend data indicates the unemployment in the two countries trails each other. The curve of the graph indicates that USA and Canada unemployment rates have been increasing from 2000 while only a slight decline between 2003 and 2006. Unemployment in the two countries started to increase again from 2007 up to the climax of global crises in 2010. USA and Canada employed different economic recovery strategies to overcome the effect of the crises. Consequently, the unemployment rates of the two countries. For example, the USA passed the economic recovery Act of 2009 to offer incentives to various industries and boost the economy. Canada also used various monetary and fiscal policies to overcome the effects of the financial crisis. However, it is clear that Canada managed to reduce unemployment at a faster rate than USA.
National GDP
Gross domestic product is a representative of the economic health of the state. It is the sum of the state’s production and consists of all purchases of services and goods that a country produces and goods and services utilized by citizens, organizations, and governing bodies. It is an important indicator for most government and planners. Comparative analysis of the GDP of Canada and USA indicates that USA has a relative higher GDP. The mean of USA GDP for the past eleven years is US $ 47332 compared to Canada’s US $ 39233. The disparities in GDP can be explained by the USA large economy, the high amount of resources including a large population and a large market and natural resources.

Eleven-year trend indicates that the two countries have experienced a similar trend in the growth of GDP. The similar in the shape of GDP curve is attributable to the fact that the two countries are in the same geographical region and as such are influenced by similar macro and micro economic factors.

It is evident that the USA population in much larger than Canada. However, the population of the two countries shows a declining growth rates.

Inferential analysis
The emergence of a relatively large unemployment gap between Canada has lead to a wide speculation and research. In order to understand the unemployment rate differences between the two countries, an analysis of variance is conducted using data from eleven years (2000-2011). The null hypothesis formulated is that unemployment rates in Canada are relatively higher than USA unemployment rates.

Null- USA and Canada have the same unemployment rate

According to the analysis, the null hypothesis is rejected because p < 0.005. Therefore, Canada unemployment rate is not significantly higher than USA’s unemployment rate. The unemployment rates of the two countries are within the same range. The mean unemployment rate of the two countries for the past eleven years is almost the same. (USA= 6.4 and 6.8 Canada). The USA and Canada unemployment rates seem to track each other some small divergence, with unemployment increasing more in USA during the global economic crisis (2009-2010) than in Canada. The differences are attributable to the severity of the USA economy at these times and Canadian use of monetary and fiscal policies through anti-inflation programs (). Despite the differences, the two countries struggled to tame inflation during the financial crisis. Data from post-crisis period indicates that Canada was able to reduce unemployment at a faster rate compared to USA. There was a sharp decline in unemployment between 2009 and 2011 (Canada 8.5 to 7.0) compared to USA (10.5 to 9.4). Canada achieved 1.5% decrease in unemployment rates while USA achieved 0.9% decrease.
Correlation between unemployment and Gross domestic product
Various economic theories acknowledge the relationship between unemployment and other economic indicators such as GDP and population growth rate. The relationship between these factors is open to economic debates and various monetary and fiscal policies target to achieve a balance.

**. Correlation is significant at the 0.01 level (1-tailed).
At 0.01 significant level, there is a significant correlation between gross domestic product (GDP) with unemployment (P = 0.346). The positive correlation between unemployment and GDP is explained in economists using Okun’s law. The Okun’s law investigates the presence of a statistical relationship between a country’s economic growth and the rate of unemployment. At the its basic form, the Okun’s law states that in order to achieve 1% decrease in unemployment rates, the real GDP of country must grow approximately 2 percent (Riddell, 2012).
The table below shows the relations hip between GDP and unemployment
Year Unemployment Rates GDP
00 3.9 45,026
01 4.8 45,046
02 5.9 45,418
03 6.3 46,137
04 5.6 47,307
05 5.1 48,312
06 4.6 49,130
07 4.7 49,571
08 6.1 48,951
09 10.3 47,041
10 10.5 47,772
11 9.4 48,282

From the table, it is evident that a decline in national product correlates with an increase in unemployment rates. For example, national GDP fluctuated between 2007 and 2008 from 49,130 to 48,951. The fluctuation correlates with an increase in unemployment from 4.7 to 6.1%. A similar trend is observed between 2008 and 2010, where the real GDP declined from 48,951 to 47,772, in 2010. Therefore, the relationship between GDP and unemployment can be divided into expansion phase (increase in GDP) and contraction phase (Decrease in GDP) using this categorization, the USA economy within the period under investigation has two contraction periods and one expansion period. The first contraction period occur between 2000 and 2003. During this period, the unemployment rates increased from 3.9 to 6.3 %. However, the increase in unemployment does not correspond positively with a decrease in real GDP. Instead, the economy is in a state of stagnation. There is no significant change in GDP between these four years (2000-2004). The mean difference in GDP is $ 394. From 2004, the economy undergoes a major expansion for four years until 2007 when unemployment rates start to rise. In 2008, the unemployment rate was 4.7 % but increased to 6.1% in 2009 and to 10.5% in 2010. 2010 was the climax of global economic and most economies. The decline in national GDP causes an increase in unemployment. In an expansion phase, real GDP increases because firms increase the quantity of output they produce. In order to increase their output, the firms hire more labor and unemployment falls. In a contraction phase, real GDP falls because firms reduce their production and lay off employees thus unemployment increases.
Correlation between unemployment and population
The ten-year data indicates a significant correlation between national population and unemployment (alpa, 0.01 p= 0.12).
Table 7 Relationship between Population and unemployment
Year Unemployment Rates Population (in millions)
00 3.9 282.38
01 4.8 285.31
02 5.9 288.10
03 6.3 290.82
04 5.6 293.46
05 5.1 296.19
06 4.6 299.00
07 4.7 302.00
08 6.1 304.80
09 10.3 307.44
10 10.5 309.98
11 9.4 312.24

On average, unemployment rates increase with an increase in population. The USA population increase from 282.3 million in 2000 to 312.2 million in 2011 correlates with an increase in unemployment rates from 3.9% to 9.4%. However, the correlation between the two is complex. If the correlation was simplest and direct, years when the country witnessed a decline in unemployment would record a decline in population. However, a closer look at the population growth rates indicates that period of economic contraction correlates with declining population growth rate.

References
Riddell D (2012). Why is Canada’s unemployment rate persistently higher than in the US?

Sherry Roberts is the author of this paper. A senior editor at Melda Research in online nursing papers. If you need a similar paper you can place your order for a custom research paper from legitimate research paper writing service services.