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  • Essay / A neoclassical perspective of the level of unemployment in China

    Even when an imbalance appears, with a certain level of unemployment, it is possible to restore the balance by lowering wages. This naturally leads to an increase in labor demand, which resets the initial equilibrium (Bos 2012). For example, China's unemployment rate has fallen in recent years to just over 4%. However, high unemployment rates have led to reduced wages and if employees demand higher wages, many more people will accept the available jobs. Salaries in other Asian countries earn up to ten times more than people working in China. This has led to increased profit margins and the attraction of foreign direct investment, as more foreign companies start operations in China (Zhang, Fan & Haan 2010). Cheng (2013) believes that the accumulation of capital in the form of new factories, financial assets, communication systems, and manufacturing machinery has contributed to economic growth in China. Nevertheless, the country's workers also played an important role in ensuring a strong and sustained increase in productivity, which was the driving force of the economic boom. Say no to plagiarism. Get a tailor-made essay on "Why violent video games should not be banned"?Get the original essayProductivity gains between 1979 and 1994 accounted for more than 42% of growth in China, and by the early 1990s, they had exceeded capital. as the most important source of growth. Equilibrium is also achieved in the event of inequalities between the levels of savings and investment. Reducing the weight of investments in total disposable income minimizes the demand for money and contributes indirectly, given the intention to stimulate it, to a reduction in the interest rate, thus becoming attractive for any potential investor wishing to establish balance of the market. The neoclassical perspective takes up the fundamental elements of classical theory but offers aspects that are specific to it. This includes the new vision concerned with the value of goods, determined based on the utility they generate and perceived at the consumer level (Cornelia Mitran & Mihai Ipate 2014). The neoclassical perspective also popularizes the marginal concept, according to which decisions made by economic actors are based on margins. For example, an organization acquires a new staff member based on the expected increase in profits the new worker will bring. Therefore, the neoclassical perspective differs from classical theory in that it provides an explanation of how essential goods such as food can be cheap while luxury items are expensive (Coussy). 2005).