2.1.3 Employment and Unemployment Flashcards
What is the labour force
The total number of people employed or seeking employment in an economy
Who are economically inactive people
People who are not in work, do not want a job, haven’t been seeking and aren’t available to work, for example retired, students, sick/disabled
What is unemployment
When someone is available and willing to work at the going wage rate so are actively seeking but cannot find work
What is the unemployment rate
unemployed workers/total labour force
What is the claimants count
A measure of unemployment, measures number of people receiving job seekers allowance
What are the types of JSA
Contribution based JSA- if u have paid two years of national insurance contributions
Income based JSA- if you are on a low income with low savings
What is an issue with the claimants counts
The criteria for eligibility has changed 30 times since 1979 making it difficult to compare over time
Who is excluded from claimants count
-pensioners
-under 18s
-full time students
-people with partners on high incomes
-people on gov training schemes
-those looking for part time not full time
-people fraudulently claiming JSA
-people eligible but classed as inactive eg not enough searching
What is the labour force survey
a measure of unemployment, asks 60000 people whether they are unemployment and looking for work
What is the criteria for the labour force survey
Without a job, actively seeking in the last 4 weeks, able to start in 2 weeks or have got a job and are waiting to start in next 2 weeks
Pros of labour force survey
-Includes people not in claimants count
-Good for international comparisons
Cons of the labour force survey
-Subject to sampling errors
-People may lie
-Difficult to decide if someone is sick or seeking work
What is underemployment
Someone who is currently in work but wants more hours who skills aren’t maximised/used in current position
-Was high amount after global financial crisis
What is the relationship between employment and unemployment
-They often increase at the same time, due to immigration or number of inactive falling meaning more people in labour force some of whom get jobs some are replaced.
What are the types of unemployment
Demand-deficient/cyclical/keynesian
Supply side
Real wage/classical
Structural
Regional
Seasonal
Frictional
Voluntary
What is demand deficient unemployment
Also know as Keynesian or cyclical
-A fall in AD due to a demand side shock decreases demand for labour because labour has a deceived demand
-Less demand, less production needed, fewer workers needed, sticky wages so unemployment increases
What is real wage/classical unemployment
When wages are set above the market equilibrium causing an excess supply of labour, this is caused by government interventions like min wages and trade union power for better conditions for employees, but wages are flexible so market will clear and employment is only short term
What is supply side unemployment
Real wage, frictional, seasonal, structural are all examples of supply side unemployment
When there are problems with mobility of labour (geographical, occupational) or a lack of incentive to work
What is structural unemployment
Industries decline because of long term changes in market conditions eg tech advancements and globalisation can cause regional unemployment when effects local areas
What is seasonal unemployment
exists in industries that only produce or distribute products at certain times of the year, eg farming and tourism
What is frictional unemployment
Exists when workers are i between jobs or in between eduction and work, this suggests that full employment is impossible, this can be reduced by information awareness
What is voluntary unemployment
When workers choose not to work at the current equilibrium wage rate, caused by excessive welfare benefits and high income tax
What is the natural rate of unemployment
the rate of unemployment that still exists when the labour market is in equilibrium
