Unemployment - Solution

Supply-Side Solutions

It is argued that supply-side policies, which include cutting taxes on businesses and reducing regulation, create jobs and reduce unemployment. However, the labour market is not 100% efficient: It does not clear, though it may be more efficient than bureaucracy. These include removing the minimum wage and reducing the power of unions. This assumes perfect competition exists in the labour market, specifically that no single entity is large enough to affect wage levels. Advocates of supply-side policies believe those policies can solve this by making the labour market more flexible. 

Supply-siders argue the reforms increase long-term growth. This increased supply of goods and services requires more workers, increasing employment. Some argue that minimum wages and union activity keep wages from falling, which means too many people want to sell their labour at the going price but cannot. Other supply-side policies include education to make workers more attractive to employers.