Unemployment should drop GDP...shouldn't it?

While I don’t agree to the consumption approach since the GDP is still about production imo and how much consumption-dependent the economy is will vary quite a lot by countries. Nonetheless, high unemployment would still mean inefficient use of production elements, meaning significantly lower GDP compared to potential value. (as mentioned here) Therefore, high unemployment can be a negative factor of GDP.

But if you are going to do that, I think this is a good chance to change how wages-to-low/middle income works. As I’ve mentioned in the income change proposal thread, unemployment currently has no impact on people’s income. Unemployment is that underrated in this game.

I’d also like to mention that Technology & Industrial Automation has so strong impacts on unemployment and players can’t wait for the market to solve the problem. I know what structural unemployment is but it’s something beyond what players can suppress with unexceptional measures. You might have already read that thread about unemployment and other simulations optimization. I had a feeling that maybe there are too many penalties to high technology and some might even try reducing it intentionally to avoid them. And it turned out that avoiding max tech was the key for full employment. Of course you can add more situations or links so that it’s harder to remain competitive without >90% technology as years pass, but your change will still mean that players are going to receive a permanent penalty of -X%p GDP for having high technology.

On your ‘antidotes’, I doubt they will actually be effective unless you add dedicated consumption simulation since

  • QE/Heli Money are already quite popular policies with little downsides. Players won’t save them for future recessions.
  • Lower GDP will mean less tax revenue in the first place. Do you think capitalistic governments will take a risk of going into even bigger deficit by cutting taxes?
  • If we suppose that a GDP drop has been caused by high unemployment, these measures can’t just go away after the recession since unemployment would be the same unless a significant increase has been made in GDP, which is unlikely to happen for players having no problem at achieving max GDP.

In that sense, I suggest things below.

  • Structural Unemployment from high Technology and/or Automation should be either A) weaker, B) decaying over time, or C) countered with some policies or situations.
  • Unemployment arising from higher Productivity & maxed-out GDP needs to be dealt with.
  • Unemployment Benefit should negate GDP penalty (since it increases unemployment but actually boosts income) if you are going to add a direct link between the Unemployment & GDP. I’d like to tell you that just use low & middle income simulations but income_fixed links would be tricky points.
  • If no significant changes are going to be made in simulations, consider adding more & stronger employment effects to policies. Telling players to deal with recessions from unemployment without any effective tools to fight unemployment would be rather absurd.

Related Posts of mine
Interesting Effects of Productivity & Maxed-out GDP
Lists of proposed changes to income simulations +misc