2. Unemployment and Employment Flashcards
unemployment definition
to be counted as unemploed, somebody must be of a working age, willing and able to work and actively sekking work but cannot find one.
Labour force survey
asks 60k to 70k UK households to self classify as being employed, unemployed or economically inactive.
Claimant count
total number of recipients of job seekers allowance (JSA) added to those looking for work to claim Universal Credit (UC)
The national rate of unemployment drawbacks:
- regional & local variations
- variations in age, gender, ethnicity or social background
- doesn’t tell us about how long people have been out of work.
Long term unemployment
refers to people who have been unemployed for 12 months or more. The longer someone is unemployed, often hard to get a job.
Youth unemployment
the measured unemployment rate for all 16-24 yr olds.
Why is youth unemployment high?
- lack of experience
- lack of education
- age discrimination
- economic downturn - young people are first to be laid off in a struggling economy
- automation and technological advancements.
Discourage workers
constitue one group of inactive work - seekers. These are person who have ceased to seek work because they believe there aren’t any suitable jobs.
Hidden economy
AKA disguised unemployment. The number of people who do not have work but are not counted in government reports.
Causes of hidden unemployment?
- many long-term unemployed give up search for work
- people are sidelined onto disability benefits - risen since pandemic
- caring for elderly relatives
- gig economy, zero hour contracts.
Are unemployment figures accurate?
- scope for sample error
- excludes those economically inactive
- unemployment is not the same as under-employment
- many people work in hidden economy
What is the gig economy?
- work arrangement where people perform short term, freelance work
- project by project basis
e.g. uber, freelance writers, virtual assistants - grown due to rise in technology
- linked to zero hour contracts
Seasonal unemployment
worker might be without paid jobs due to the time of the year when there are seasonal changes in demand, production and employment.
e.g. farming, tourism, retailers, hospitality, construction, tuition
Frictional unemployment
caused by workers seeking a better job or who are between jobs. It also affects people who are new entrants to the labout market such as school leavers and college/ uni grads.
Causes - school and college leavers entering markets, people after carear choice early - retrieved coming back to the labour market, mothers returning, incomplete info
Causes of structural unemployment
new jobs often require new skills, unaffordable housing, employer discrimination , erosion of skills, impact of automation
What is the unemployment trap?
a cycle which makes it hard for individuals to find work
unemployment can cause a loss of skills, experience, confidence, and motivation
employers less likely to hire somebody out of work for a long time
tax and welfare system can worsen
What is human capital?
- refers to knowledge, skills and abilities that enable people to produce G&S.
- includes intelectual and behavioural assets contribution to productivity
- more human capital makes a person more valuable and productive
- enhancing it helps reduce structural unemployment
Cyclical unemployment
is involuntary unemployment due to a lack of aggregate demand for G&S. AKA keynesian unemployment of demand-deficient unemployment.
Real wage unemployment
is a concept that comes from the classical school of economic thought. Its the idea that unemployment is caused wages being too high relative to the productivity of workers.
Employers are unwilling to hire workers at the current wage level because they believe the workers arent worth that much. Occurs when there is a surplus of workers in an industry.
What is real wage rigidity?
Wage rigidity - workers resist real wage reductions during downturns
Real wages drop when nominal wages don’t rise as fast as prices.
Keynesian view: wages are sticky adjusting slowly downwards due to:
- long term labour contracts, trade union agreements, social norms about FP.
Voluntary unemployment
occurs when individuals choos not to work for various reasons, even though suitable job oppurtunities are available to them.
Involuntary unemployment
occurs when individuals cant find a job
The natural rate of unemployment
represents the level of unemployment that exists in an economy when it is operating at full potential or in a state of long-term equilibrium.
It is often describes as the level of unemployment that exists when the labour market is in equilibrium.
What is economic inactivity?
- The economically inactive are people of working age but not in work who have not been looking for a job within the last 4 weeks.
Main reasons: - students in full-time education/ on training courses
- looking after family or home
- long term sickness
- early retirement
- discouraged workers
Consequences of high unemployment?
- waste of scarse labour resources
- a reduction in a countrys potential trend rate of growth
- higher welfare spending for the gov’t
- worsens income inequality
- labour market failure.
Social costs of high unemployment
Decreased self-esteem and mental health, family breakdowns, reduced social mobility, increased inequality.
Economic costs of high unemployment
- lost output and productivity, reduced consumer spending, lower tax revenue, increased gov’t spending on welfare benefits.
Economic scarring
refers to the medium long term damage done to the economies of one or more countries following a sever economic shock which then leads to a recession.
Underemployment
is when people work for less hours then they want to. Underemployment can rise even though unemployment is declining.
Regional unemployment
decline in a industry based in area.
