2.3 Signposting

Question 1

Problem with LFS (Labour Force Survey) Meausure of Unemployment

Answer 1

• The Hidden Unemployed
• The Economically Inactive
• The Under-Employed
• Disparities
• Cost

Question 2

Types of Unemployment

Answer 2

• Cyclical Unemployment (Demand-Defecient/Keynesian Unemployment)
• Real Wage Unemployment (Classical Unempoyment)
• Frictional Unemployment
• Seasonal Unemployment
• Structural Unemployment

Question 3

Causes of Structural Unemployment

Answer 3

• A country losing its comparative advantage in production in a given industry
• Technological advancements
• Education (Poor Education, Lack of Education, Education that doesn’t evolve with the times)

Question 4

Determinants of the Natural Rate of Unemployment

Answer 4

• Generous benefits system and high rates of income tax
• Excessive labour market regulations
• Under provision of transport infrastructure and affordable housing infrastructure
• Underprovision of adeqaute in work training schemes

Question 5

Costs of Unemployment to the Economy

Answer 5

• Lost output
• Deterioration of government finances
• Cost to other economies
• Social Costs

Question 6

Costs of Unemployment to the Individual

Answer 6

• Lost income
• Hysteresis

Question 7

Benefits of Unemployment

Answer 7

• Easier for firm to find workers
• Unemployment allows workers to take time in finding a suitable, rewarding job for themselves
• Unemployment can help to keep inflation under control

Question 8

Evaluation of Whether Unemployment is Good or Bad

Answer 8

• The level of unemployment
• The duration of unemployment
• The type of unemployment
• The distribution of unemployment