3. Economic issues - Unemployment

Question 1

Unemployment is measured as…

Answer 1

the percentage of the Australian labour force classified as unemployed.

Question 2

Labour force can be calculated as…

Answer 2

Total Australian Labour Force = Employed (full time + part time) + Unemployed

Question 3

Employed persons are…

Answer 3

anyone over the age of 15 who worked for at least one hour per week (or was on paid leave) PLUS Employers who had a job, business or farm PLUS Unemployed who were actively seeking work.

Question 4

Influences on size of the labour force

Answer 4

Size of population / level of net migration / age distribution / participation rate of working age population (heavily impacted by young workers looking for their first job, mothers returning to the workforce and mature age job seekers)

Question 5

Labour force participation rate formula

Answer 5

(Labour force / Working-age population) x 100

Question 6

Unemployment trend

Answer 6

Unemployment peaked at 11% during 1992 but has steadily declined and then stabilised due to sustained economic growth (until COVID-19).

Question 7

Types of unemployment

Answer 7

Cyclical / Hardcore / Structural / Long term / seasonal / Frictional / Underemployment

Question 8

Cyclical unemployment

Answer 8

Unemployed caused by downturn in the economic cycle

Question 9

Hardcore unemployment

Answer 9

Unemployed persons who have undesirable characteristics such as ex-criminals or drug users

Question 10

Structural Unemployment

Answer 10

A mismatch between the skills of the unemployed and the skills required in jobs available.

Question 11

Long term unemployment

Answer 11

Unemployed for more than 12 months

Question 12

Seasonal unemployment

Answer 12

Unemployed due to the seasonal nature of some jobs

Question 13

Frictional unemployment

Answer 13

A period of unemployment when between jobs

Question 14

Underemployment

Answer 14

Those part-time/casual employees who are willing and are able to work more hours.

Question 15

Causes of unemployment

Answer 15

decrease or deficiency in aggregate demand - Cyclical unemployment
Structural cahnge - structural unemployment
Wage expectations

Question 16

NAIRU (Non accelerating inflation rate of unemployment) refers to…

Answer 16

the rate of unemployment that is consistent with a constant rate of inflation or no change in inflation. (the lowest unemployment rate which can be sustained without a rise in Inflation)

Question 17

Main groups affected by unemployment

Answer 17

Young people (lack of skills, experience, training and education)
Workers with lower levels of education
Workers in unskilled occupations
Groups like recent migrants, ATSI, sole parents, industries in structural change

Question 18

Effects of unemployment

Answer 18

1. Opportunity Cost of lost output and income
2. Loss of human capital
3. Loss of self esteem and dignity
4. Increased tax burden
5. Less equal distribution of income
6. Social costs

Question 19

Policies to reduce unemployment

Answer 19

1. Expansionary monetary policy (cutting interest rates)
2. Expansionary fiscal policy (increase in spending/reduction in taxes)
3. Industrial relations (employer - employee relationship)
4. Microeconomic reform