2.1.3 Flashcards
What is the official measure of unemployment in the UK based on?
The Labour Force Survey
What must a person be classier as to be unemployed?
Without a job, want a job, actively sought work in the last 4 weeks and are able to start work within the next to weeks
When does underemployment occur?
Looking for an extra job or actively searching for a new job with longer hours to replace their current job.
Preferring to work longer hours In their current job.
What are the advantages of the Labour force survey method?
-Because the same methodology is used in many countries, it allows inter-country
comparisons
-The criteria for assessing unemployment has changed very little over time, and so it
allows good quality timeseries comparisons
-It provides a very rich data set on many aspects of the labour market
What are disadvantages of the Labour Force survey method?
1.Because it is a survey of only 60 000 households, there will be sampling errors – and not everyone who is unemployed can be counted
2. It is costly and time-consuming to carry out
3. It is only conducted quarterly, so may not pick up changes in the labour market very
quickly.
What are advantages of the Claimant count measure of unemployment?
-Accurate in the sense that an exact number of people who claim unemployment benefit
can be calculated – this also makes it an inexpensive measure
-It is easy to classify whether someone is actively seeking work or not
-It is easy to see regional / local differences in unemployment patterns
-The data is produced monthly
What are disadvantages of the Claimant count measure of unemployment?
-There are a lot of unemployed people who do not meet the criteria for collecting
unemployment benefits (i.e. they are ineligible perhaps because they have savings, or a
partner who is in employment, or are under 18)
2. People might be to too proud to claim – part of the problem of calculating the scale of
hidden unemployment
What are the economic and social costs of unemployment?
-Slower long-run trend rate pf economic growth
-Risks of a period of price deflation
-Rising income inequality
-Erosion of people-s skills
-Fiscal costs to government as tax revenues shrink
-Externalities from social problems
What are the economic effects of falling unemployment?
Increased employment increases real GDP helps raise real living standards.
Less welfare spending, extra tax revenues
What are the potential disadvantages of falling unemployment?
- Falling in productivity if unemployment becomes too low.
- Acceleration in demand-pull and cost-push inflation if unemployment falls rapidly
- Labour shortages
What is Macro stimulus policy as a policy to reduce unemployment?
-Low interest rates and improving credit supply to businesses.
-Infrastructure investment projects -Depreciation in the exchange rate
What is cutting the cost of employing extra workers as a policy to reduce unemployment?
-Reduction in the rate of national insurance contributions.
-Financial support for apprentiships
-Extra funding for regional policy
What is competitiveness policies as a policy to reduce unemployment?
-Reductions in corporation tax.
-Tax incentives for research/ innovation spending
-Enterprise policies to encourage new business start-ups.
What is occupational mobility as a policy to reduce unemployment?
-Better funding for and more effective work training
-Teaching new skills
-An expansion for apprenticeship/intership programmes
What is improving geographical immobility as a policy to reduce unemployment?
-Rise in house-building to keep property prices lower and encourage more affordable housing rents.
-Active regional policy to improve transport infrastructure.
