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JOURNAL OF APPLIED BUSINESS AND ECONOMICS

Unemployment and Productivity in the American Economy

Author(s): Adil H. Mouhammed

Citation: Adil H. Mouhammed, (2012) "Unemployment and Productivity in the American Economy," Vol. 13, Iss. 4, pp. 52-58

Article Type: Research paper

Publisher: North American Business Press

Abstract:

This paper aims at analyzing the unemployment problem as is related to productivity. Higher labor

productivity will increase demand for labor, because workers will contribute significantly to firms’

revenues relative to their wages. Having estimated the effect of productivity on the rate of unemployment,

the paper suggests several economic policies aiming at solving this basic problem that has generated

misery and poverty for many people and less tax revenues for the states and the Federal government. Not

surprisingly, unemployment can be reduced over the business cycle but cannot be eliminated, because a

low rate of unemployment will increase wages of the working people and reduce their labor intensity and

productivity over the late expansionary phase of the business cycle.