Theories of Employment

Theories of employment explain why jobs are available and how people find work. Key ideas include the Classical Theory, which suggests markets naturally balance supply and demand, so full employment occurs when wages and prices adjust. The Keynesian Theory emphasizes that total demand in the economy influences employment; when demand is low, businesses hire fewer workers. Other theories, like the Structural and Frictional theories, focus on mismatches between skills and jobs or the time it takes to find a new position. Overall, these theories help understand the economic factors affecting employment levels.