There are two main strategies for reducing unemployment –
- Demand side policies to reduce demand-deficient unemployment (unemployment caused by recession)
- Supply side policies to reduce structural unemployment / (the natural rate of unemployment)
Quick list of policies to reduce unemployment:
- Monetary policy – cutting interest rates to boost AD
- Fiscal policy – cutting taxes to boost AD
- Education and training to help reduce stuctural unemployment
- Geographical subsidies to help firms invest in depressed areas
- Lower minimum wage to reduce real wage unemployment
- More flexible labour markets, to make it easier to hire and fire workers.
