3.2 employment and unemployment Flashcards
what is unemployment
number of people who are actively seeking a job but are unable to find one
what are the consequences of unemployment on the economy
crime
high fiscal deficit -less income tax, more welfare benefit
loss of workers to other countries - reduce PPF
rising income inequality
reduced output, low confidence
possible negative multiplier effect
consequences of unemployment on individuals
falling incomes poverty depression health problems lower standards of living debt problems
how is the unemployment rate measured
claimant count- people receiving job seeker allowance
labour force survey measure
what is the difference between voluntary and involuntary unemployment
voluntary unemployment are those without jobs not looking, ‘economically inactive’ - stay at home parents
while involuntary unemployed people want jobs
what does underemployed mean
people who are employed but would like to work more hours, like part time workers who want to be full time
what is structural unemployment
long term unemployment caused by industries declining, so the workers skills are no longer needed in the workforce, changes in the economy over time, an example being the closure of the coal mines in the 80’s which caused lots of unemployment
what is cyclical unemployment
unemployment due to lack of AD, that occurs when the economy moves into a recession
also known as : demand-deficient unemployment
Keynesian unemployment
what is seasonal unemployment
unemployment due to seasons of the year, high demand in one season and very low in others, eg ski instructors
what is frictional unemployment
when people are between jobs, will always be some of this
what is real-wage unemployment
when real wages are too high, above the equilibrium wage rate, meaning that employers can’t afford to hire more workers as they cost too much,
caused by high trade union power
high national minimum wage
‘sticky’ wages, slow to adjust
what are the supply side factors of unemployment
labour market flexibility - trade union strength
skills of workers
geographical mobility of workers
occupational mobility of workers
what is geographical immobility of labour
when workers are able to or unwilling to relocate in search of a job
what is occupational immobility of Labour
when workers are unable or unwilling to learn a new still for a job in a different sector
what are the demand side factors of unemployment
health of firms - profit levels demand for goods
confidence of firms
overall strength of economy
government intervention to encourage hiring
levels of labour market regulations - eg cost of hiring
