One cause of market failure is the immobility of factors of production. There are two main types of factor immobility, occupational and geographical immobility.
Immobility of labour – a cause of unemployment and market failure
One of the main causes of unemployment is that workers lack the skills required by expanding industries in the economy.
Geographical immobility refers to barriers people moving from one area to another to find work. There are good reasons why geographical immobility might exist:
Youth Unemployment - NEETS
In the first quarter of 2013, 1.1 million 16-24 year olds in the UK were not in education, employment or training (NEET), 15% of people in this age group.
Not all unemployed 16-24 year olds are NEET and not all people who are NEET are unemployed. 60% of unemployed 16-24 year olds are NEET, the rest are in education or training. 53% of people who are NEET are unemployed, the rest are economically inactive: not seeking work and/or not available to start work.
Current Government schemes with elements aimed at reducing the number of young people who are NEET include: lifting the participation age, the Youth Contract and the Work Programme
Adapted from news reports, July 2013
Policies to Improve the Mobility of Labour
To reduce occupational immobility:
To reduce geographical immobility:
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