2:1:3 - Measures Of Economics Performance - Employment And Unemployment Flashcards
What is meant by the level of employment?
Is the number of people in work
What is meant by the rate of employment?
Is the proportion of people in work relative to the size of the workforce.
What is meant by workforce?
A measure of people of working age who are willing and able to work.
What are the 2 main ways of measuring unemployment?
- The Claimant Count
- UK Labour Force Survey
What is the Claimant Count?
A measure of unemployment using the number of people who are claiming Job Seekers Allowance (JSA)
How do you get Job Seekers Allowance?
- Need to have made a certain number of National Insurance contributions by working in the past.
- Prove in an interview you are looking for work every 2 weeks
What is the amount given to someone on Job Seekers Allowance?
£73 a week
What can Stop or Reduce claims for the Job Seekers Allowance?
- Have a partner who earns an income
- Have savings above £6,000
- Payments are stooped all together if you have more than £16,000
What age do you need to be in order to get Job Seekers Allowance?
Must be over 18 and below retirement age.
Why is the Claimant Count useful?
- Quick
- Cheap to obtain
- Useful measure of hardship
What is the disadvantage of using the Claimant Count?
Doesn’t give the full picture of unemployment
What is meant by the Labour Force Survey?
A measure of unemployment of those out of work in the last 4 weeks and ready to start in the next 2 weeks
Out of the International Labour Organisation (ILO) and the UK Labour Force Survey which one is used in the UK?
Labour Force Survey
Is it legal requirement for every EU country to conduct this survey?
Yes
To make sure EU countries get data which can be compared to with other countries what must these EU countries do?
Use exactly the same methods
How does the UK Labour Force work?
- Face-to-face interview with a quarterly telephone survey of 80,000 households
- Asking several questions including if anyone has been out of work for 4 weeks and is ready to start in 2 weeks
- Questions only relate to those who are over the age of 16
What is the advantage of using the Labour Force Survey rather than the Claimant Count?
It is more inclusive
What are the disadvantages of using the Labour Force Survey rather than the Claimant Count?
Survey data is 6 weeks out of date when it is published.
What is meant by Underemployment?
A situation in which a worker is employed but wants to work more hours
What is meant by Unemployment?
A situation in which someone is willing and available to work, but it not currently employed
When did the idea of Underemployment become particularly important?
2008 financial crisis
What factors affect employment?
- The school leaving age - anyone in education is not counted as economically active, however in the long term is likely to make school leavers more employable
- Number of school leavers entering higher or further education - University fees are making universities less attractive.
- Level of Net migration - increases the size of the workforce
- Availability of jobs - there are likely to be higher levels of employment if there are more jobs available
- Level of taxes and benefits - if taxes on income are high or out-of-work benefits are generous, there is a deceptive for people to work.
What is meant by Inactivity?
A measure of people of working age who are either unwilling or unable to work.
What percentage of people who are working age in the UK are classified as inactive?
Over 20%
What kind of people are Inactive?
- Students in further education
- People looking after children
What is the main problem with the measure of inactivity?
It can make levels of unemployment look lower than they actually are.
How many people are unable to work because of health issues?
3 million
What is meant by the Classical View on Unemployment?
There are only unemployed people who are not able and willing to work at the going wage rate. If people could accept lower wages they would find work.
What is the solution to the Classical View of unemployment?
Laissez Faire - leave the market to get on with it and eventually the problem of unemployment will go away.
What is meant by Real Wage Unemployment?
A measure of people who are unwilling to work at the going wage rate.
What can real wage unemployment also be called?
Real Wage Inflexibility
What do people who think that real wage unemployment think is the solution to this?
- Out-of-work benefits should be cut
- Trade unions should be restricted
- Should not be a minimum wage
Therefore unemployed people should be forced to work
What do people who believe in the Keynesian view believe?
People can be unemployed even in the long run, because there is insufficient aggregate demand in the economy.
What is meant by Demand-deficient unemployment?
Also known as cyclical unemployment this is caused by a lack of of aggregate demand in an economy such as during a recession
What are the causes of Demand-Deficient Unemployment?
- Too much saving
- A lack of business confidence
- an increase in the value of money
- Slow rates of productivity growth relative to other countries
- External shocks such as oil price rises
- Increased use of imports
What did Keynes believe solves Demand-deficient unemployment?
Fiscal or Monetary Policy
What is meant by Structural Unemployment?
A measure of worker who lose jobs in a declining industry and do not have the skills to join other industries.
What is meant by Frictional Unemployment?
A measure of people who are between jobs, people who are moving from one job to another.
Why is Frictional Unemployment actually a good thing?
Because this kind of unemployment is a sign of a healthy, flexible labour market with people willing to change jobs in order to improve their prospects.
What is meant by Seasonal Unemployment?
A measure of people who only have jobs only at a certain time of the year.
How can seasonal unemployment be addressed?
Developing the mobility & geographical mobility of Labour
What does Migration look at?
Immigration (people moving into the country) and Emigration (people moving out of a country)
What is Net Migration?
Immigration - Migration
Why might Migration occur?
Because people are looking for:
- Better paid work
- Do not agree with the way in which they are being taxed
What social reasons can cause Migration?
- To study abroad
- Social and Political Problems
- Accompany family members
- Follow a different lifestyle
If immigrants come into a country to fill job vacancies what will this leads to?
Increase in employment
What will happen if immigrants are looking for work but either do not find it or displace other people from work?
Employment may be unchanged and unemployment (labour surplus) might increase
The higher the level of [……..] in the labour force, the more flexible workers will be if there is a change in requirement in the labour market.
Skills
What are the effects of unemployment on the economy?
- Costs to consumers - people will have lower incomes and living standards will fall
- The cost to firms - Firms will find that people spend less so they will have to lower prices and make less profit.
- The cost to workers - Workers without work might find the skills become obsolete
- The cost to government - As unemployment rises the government has to pay more in jobseekers benefits and will receive less in tax.
- The cost to society as a whole - the economy could produce more without anything being given up. Unemployment can cause crime, civil unrest and other social problems.
