Unemployment has risen from 3% to 6%. Some is from a recession and some from factories closing permanently. Compare three measures.
Raise government spending
- Construction workers: New projects create jobs.
- Recession job losses: Higher demand brings back cyclical jobs.
- Ex-factory workers: Their skills may still not match the new jobs.
More spending fixes cyclical unemployment but not the skills mismatch.
Fund retraining
- Ex-factory workers: Gain skills for growing industries.
- Economy: Higher labour quality supports long-run growth.
- Timing: Courses take months; jobs may come slowly.
Retraining tackles structural unemployment but takes time.
Improve job-matching services
- Job seekers: Find suitable vacancies faster.
- Firms: Fill vacancies more quickly.
- Limit: Cannot create jobs where there are none.
Better information shortens frictional unemployment, but does not add jobs.