2.3 Employment

Question 1

What is employment?

Answer 1

A measurement of the total number of people willing and able who are currently working within an economy.

Question 2

What does it mean to be unemployed?

Answer 2

A person who is willing and able to work but cannot find a job.

Question 3

What is the unemployment rate?

Answer 3

The proportion of people currently unemployed compared to the size of the current workforce.

Question 4

How is unemployment measured in the UK?

Answer 4

• Labour force survey
• Claimant count of unemployment

Question 5

How is the labor force survey conducted?

Answer 5

A survey is sent to a sample of households in the UK asking questions about the employment status of those living there and if they have been out of work for more than four weeks and are ready to start within the next two.

Question 6

How is the claimant count of unemployment measured?

Answer 6

By measuring the total amount of people within the UK claiming job seeker’s allowance each month.

Question 7

Labor force survey, pros and cons?

Answer 7

Pros:
- Easy international comparison

Cons:
- Time consuming
- Sampling problems
- Takes lots of time

Question 8

Claimant count of unemployment, pros and cons?

Answer 8

Pros:
- Quick
- Allows for local comparison in regions

Cons:
- Fraud can cause numbers to be incorrect
- Many are ineligible for the benefit due to savings

Question 9

What are the types of unemployment?

Answer 9

• Frictional unemployment
• Structural unemployment
• Voluntary unemployment
• Real wage unemployment
• Demand deficient unemployment

Question 10

What is frictional unemployment?

Answer 10

Frictional unemployment occurs due to people moving between jobs.

Question 11

What is structural unemployment?

Answer 11

Structural unemployment occurs due to changes in the economy meaning different types of labor is required.

Question 12

What is voluntary unemployment?

Answer 12

Voluntary unemployment occurs due benefits being too close to the wage rate meaning people falsely claim as working is not worth the extra effort and willingly stay unemployed.

Question 13

What is real wage unemployment?

Answer 13

Real wage unemployment occurs when the wage rate is above the equilibrium rate leading to an excess supply of labor.

example: https://studymind.co.uk/wp-content/uploads/2023/03/192616.png

Question 14

What is demand deficient unemployment?

Answer 14

Demand deficient unemployment occurs when there is a lack of arrogate demand in the economy therefore the economy can be in an equilibrium and not everyone will have a job due to a lack of confidence or saving.

Question 15

What are the cons of unemployment?

Answer 15

• Unemployment reduces the standards of living among the public
• Consumers spend less
• Government have to spend taxes on job seekers allowance
• Overall GDP will be lower than it otherwise could’ve been.

Question 16

What are the pros of unemployment?

Answer 16

• Decreased risk of strikes
• Firms forced to reduce prices
• Reduced inflation

Question 17

What effects unemployment?

Answer 17

• A higher school leaving age will reduce employment short term but will increase employment long term.
• Higher university fees will increase employment short term but decrease employment long term.
• Net migration will increase size of workforce and can reduce or increase employment levels dependent on skill level of workers.
• Job availability usually means the more jobs the more employment. (In general not always)