2.1.3- Employment and Unemployment

Question 1

What is unemployment?

Answer 1

A situation where a person actively searches for a job, but is unable to find work.

Question 2

What are some of the measures of unemployment/

Answer 2

• Claimant Count
• Labour Force Survey

Question 3

What is the claimant count?

Answer 3

The number of people receiving benefits for being unemployed.

Question 4

What is the labour force survey?

Answer 4

-The LFS is a sample of people living in households and is a legal requirement for every country in the EU.
- The figures are only an estimate of the true level f unemployment.

Question 5

What are the types of unemployment?

Answer 5

• Frictional Unemployment
• Structural Unemployment
• Seasonal Unemployment
• Cyclical Unemployment
• Real Wage Unemployment
• Voluntary Unemployment
  -Geographical Unemployment
• Demand Deficit Unemployment

Question 6

What is demand deficit unemployment?

Answer 6

• Unemployment arising from economic slowdown and less demand in the economy

Question 7

What is Voluntary Unemployment?

Answer 7

-People choosing to stay on benefits

Question 8

What is frictional unemployment?

Answer 8

• People who are in between jobs.
• This could be due to new workers entering the labour market or people who have chosen to leave their previous job.

Question 9

What is structural unemployment?

Answer 9

• Immobility in the labour market

Question 10

What is geographical unemplyment?

Answer 10

• Occurs when people are without work because of immobilities in firms and workers moving to/from depressed regions.

Question 11

What is real wage unemployment?

Answer 11

• Occurs when there’s another wage set above the equilibrium wage.
• At a higher wage rate, the labour demand will exceed the labour supply, causing an increase in unemployment.

Question 12

What is cyclical unemployment?

Answer 12

• Cyclical unemployment is a lack of employment as a result of changes to an economy’s business cycle.

Question 13

What are some of the impacts of unemployment on workers?

Answer 13

• loss of income
• some may lose their skills if they have ben unemployed for a long time
• those who re in jobs ill suffer rom lower job security and will fear being made redundant

Question 14

Demand- side factors affecting employment/ unemployment

Answer 14

-Health of firms e.g profit levels, demand for goods
- Confidence of firms
- Overall strength of economy
- Government intervention to encourage hiring

Question 15

Supply side factors that affecting employment and unemployment

Answer 15

• Labour market flexibility
• Skills of Workers
• Geographic mobility of workers
• Occupational mobility of workers

Question 16

What are fiscal problems from umemployment?

Answer 16

• Automatic stabilisers like unemployment benefits would increase gove spending when unemployment is high
• Gove receives less income tax, meaning less tax revenue for spending in the public sector

Question 17

What are some social problems that come from high unemployment?

Answer 17

• Increased rates of crime, which costs the government more on policing
• Increase in negative externalities

Question 18

How does unemployment affect output?

Answer 18

• If unemployment is not due to workers being replaced with capital it is likely that real GDP will fall with increased unemployment
• Reduced confidence and negative multiplier effect could magnify the negative impact on the economy

Question 19

What is underemployment?

Answer 19

• Refers to a situation where an individual is working, but their job doesn’t fully utilise their skills or abilities
• eg part time work