2.1.3 Employment and unemployment Flashcards
How is someone considered unemployed?
Someone is considered to be unemployed if they are not working but actively seeking work.
What does the labour force include?
The labour force consists of all workers actively working and the unemployed (who are seeking work).
What does the non-labour force include?
The non labour force includes all those not seeking work e.g. stay at home parents, pensioners, school children.
What makes someone economically inactive?
Economically inactive are those people who are between 16-65 and not working or not seeking work.
What are the 2 ways the UK measures its unemployment?
/The international labour organisation (ILO) survey
/Claimant count
Explain the ILO survey?
An extensive survey is sent to a random sample of ≈ 60,000 UK households every quarter. Respondents self-determine if they are unemployed based on the ILO criteria:
/Ready to work within the next two weeks
/Have actively looked for work in the past one month
What is a positive of the ILO survey?
The same survey is used globally so it’s useful for making international comparisons.
Explain the claimant count?
Counts the number of people claiming job seekers allowance (JSA) in the UK. More stringent requirement to be considered unemployed than with the ILO survey. Requires claimants to meet regularly with a ‘work coach’.
How is someone underemployed?
Someone is underemployed when:
/They want to work more hours than they currently work
/They are working in a job that requires lower skills than they have e.g. an architect working as a gym instructor
What is underemployment normally a response of?
Underemployment is often a response to cyclical unemployment. Workers who have lost their jobs in a weak economy are willing to take part-time jobs or accept roles outside of their main skill base.
What is underemployment normally a consequence of?
Underemployment is also a consequence of structural unemployment. Unless workers retrain and gain new skills, it will be hard for them to gain full employment.
How could employment and unemployment rate increase?
/May be caused by increased immigration which causes working age population to increase
/May be caused by a decrease in the inactivity rate as people move from inactive to employed
What is structural unemployment?
Structural unemployment occurs when there is a mismatch between jobs and skills in the economy. It usually happens as the structure of an economy changes e.g. the secondary sector is declining and the tertiary sector is growing.
What is cyclical unemployment?
Cyclical or demand deficient unemployment is caused by a fall in AD in an economy. This typically happens during a slow down or recession. The demand for labour is a demand derived from the demand for goods/services.
What is seasonal unemployment?
Seasonal unemployment occurs as certain seasons come to an end and labour is not required until the next season.
What is frictional unemployment?
Frictional unemployment occurs when workers are between jobs. This is usually short-term unemployment. Workers have voluntarily left their previous job to search for another.
What is real wage unemployment?
Real wage unemployment occurs when wages are inflexible at a point higher than the free-market equilibrium wage. Usually caused by the existence of minimum wage laws. The higher wage creates an excess supply of labour. This excess supply represents real wage unemployment.
What is net migration?
Net migration is the difference between inward migration and outward migration (emigration).
What net migration do low developed economies experience?
Less developed economies generally have net outward migration.
What net migration do high developed economies experience?
/More developed economies generally have net inward migration
/More developed economies usually have skilled workers emigrating
What significance does migration cause on employment?
/Fill job vacancies that local citizens cannot (or will not), these can include dangerous labour and low skilled jobs
/Increase supply of labour may push down wages in the economy, thus increasing employment
/Immigration causes increase in population which means higher consumption, greater output requires more labour so it creates more jobs
Effects of unemployment on firms?
/Loss of sales revenue
/Loss of output/production
/Changes the skill level in the economy
Effects of unemployment on government?
/Increased spending on benefits
/Less tax revenue
/Increased spending on retraining
Effects of unemployment on the economy?
/Increased crime
/Vandalism
/Increased anti social behaviour
/Increased homelessness
Effects of unemployment on the individual?
/Loss of income
/Health issues
/Mental instability
/Sense of failure
/Martial failure
/Stress increases
/Suicide
