Supply Side Policies for Reducing Unemployment

a)An explanation of supply-side economics.

Supply side policies are government attempts to improve productivity and efficiency in the economy.
See: Supply side policies

b)The remedies supply-side economists put forward to reduce unemployment.

1. Better job information to help reduce frictional unemployment.
2. Lower unemployment benefits to increase the incentive to get a job. It is argued generous unemployment benefits create an unemployment trap, where those on benefits would not get any extra income after tax if they decided to work.
3. Reduced Power of Trades Unions. Trades unions can cause real wage / classical unemployment. If you reduce the power of unions, wages will fall to equilibrium levels leading to less unemployment. Also reducing minimum wages
4. Increased labour market flexibility. eg. make it easier to hire and fire workers; this should encourage firms to set up and hire workers.
5. Better education and training.

See also: supply side policies and reducing unemployment