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Economics A-level > 3.2 Employment and Unemployment > Flashcards

3.2 Employment and Unemployment Flashcards

1
Q

WHat is the claimant count?

A

number of people officially claiming unemployment related benefits - must be actively seeking work

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2
Q

What is the labour force survey?

A

all those actively seeking and available for work, whether or not they are claiming benefits

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3
Q

What is long term unemployed

A

people unemployed for at least one year

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4
Q

what is full employment

A

when there is enough unfilled job vacancies for all the unemployed to take work

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5
Q

What are discouraged workers?

A

people out of work for a long time who may give up on job search and effectively leave the labour market

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6
Q

What does economically inactive mean?

A

thosw who are of working age but are neither in work nor actively seeking paid work

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7
Q

What does employment rate mean?

A

the percentage of the population of working age in full time or part time paid work

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8
Q

What does unemployment rate mean

A

percentage of the economically active population who are unemployed

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9
Q

What are zero hours contracts?

A

workers on call and do not get a quaranteed number of working hours

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10
Q

What is the natural rate of unemployment ?

A

rate of unemployment when the labour makret is in equilibrium. it is caused by supply side factors rather then demand side

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11
Q

Give determinants of natural rate of unemployment

A
  • availability of job information
  • level of benefits
  • skills + education
  • degree of labour mobility
  • felxibility of laboru market
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12
Q

What are the consequences to the economy of unemployment?

A
  • waste of human capital and lost output (low LRAS)
  • reduced international competitiveness (reduces incentives for firms to invest, leads to increased export competitiveness)
  • increased gov spending
  • lost tax revenue
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13
Q

What are the consequences to firms of unemployment ?

A
  • reduced demand for goods and services
  • less incentive to invest
  • higher business taxes
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14
Q

What are the consequences to the unemployed of unemployment?

A
  • lower living standards
  • social costs
  • financial costs
  • de-skilling
  • reduced chances of finding work
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15
Q

What is frictional unemployment?

A

unemployment that is usually short term and occurs when a worker switches between jobs

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16
Q

What are the assumptions about frictional unemployment?

A
  • a job vacancy exists
  • friction in the labour market prevents the unemployment from filling vacancy
  • number of unfilled job vacancies can be used as a measure of the level of frictional unemployed
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17
Q

What is structural unemployment ?

A
  • occurs when the demand fro labour is less than the supply of labour in an individual labour market
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18
Q

long term unemployment results from structural decline of industries due to … ?

A
  • decline of manufacturing
  • occupational immobility
  • geographical immobility
  • robotics replacing jobs
  • long term regional decline
19
Q

What are some barriers to successfully getting new jobs/

A
  • may require specific skills
  • jobs need additional training which could be costly
  • high cost / availability of childcare
  • cost of commuting to work
  • unaffordable housing
20
Q

What can labour immobilities lead to?

A

structural unemployment

21
Q

What does geographical immobility of labour mean?

A

barriers that prevent people moving from one area to another to find work

22
Q

What are some good reasons why geographical immobility might exist ?

A
  • family and social ties
  • financial costs involved in moving homes
  • high costs of renting properties
  • differance in cost between regions
23
Q

What is the occupational immobility of labour?

A
  • inability of labour to switch between differant occupations
24
Q

What is the impact of automation?

A
  • mechanism:workers operating machines , increases overall demand for labour
  • automation lessens the demand for labour as machines operate
25
Q

What is cyclical unemployment ?

A

linked to economic cycle, indicates that demand is low

26
Q

What is seasonal unemployment?

A
  • occurs when workers are laid off on a short term basis at certain times of the year
27
Q

What does real wage mean?

A

the purchasing power of the money/ nominal wage

28
Q

What is real wage employment ?

A

is unemployment caused by real wages being stuck above the equilibrium real-wage

29
Q

What four factors effect money wage rigidity?

A
  • money illusion
  • wage fixation through contracts ( cannot change wage through contracts )
  • minimum wage laws ( intervention by the Gov in fixing minimum wages)
  • efficiency wages ( employers not interested in lowering wages as high wages make workers more efficient and productive)
30
Q

How does money illusion cause money wage rigitity?

A

workers will resist any move for for cut in money wages though they might accept fall in real wages brought about by rise in prices of commodities

31
Q

What are the benefits of falling unemployment ?

A
  • increased employed (boosts real GDP, lifts living standards)
  • more people in work (extra tax revenues for gov)
  • social costs of high unemployment are severe
32
Q

What are the drawbacks of falling unemployment?

A
  • extra spending for expanding labour market might worsen current account
  • risk of an acceleration in demand pusn and cost push inflationary pressures
  • fewer spare labour will mean a rise in unfilled vacancies
33
Q

How has globalisation effected employment in the UK?

A

-competition from low cost economies led to decline in Uk manufacturing

34
Q

What are the economic and social consequences of youth employment ?

A
  • young people out of work risk a permanent fall in expected lifetime earnings from work
  • harder to start saving regularly
  • increased risk of social alienation
  • health impact including consequences for mental health
35
Q

What are some of the causes of high youth unemployment?

A
  • skills gaps ( employers may not be willing to employ people who lack reading and writing)
  • reluctant employers ( may prefer older more experianced workers)
  • falling retirement rates ( declining pension incomes means fewer jobs for younger people)
  • weak macro fundamentals
36
Q

What are policies to reduce unemployment through the increase of labour demand?

A
  • macro stimulus policies
  • cutting the cost of employing workers
  • competitiveness Policies
37
Q

How can macro stimulus policies increase labour demand ?

A
  • low interest rates and policies to increase business lending
  • depreciation in the exchange rate
  • infrastructure investment projects
38
Q

How does cutting the cost of employing workers increase labour demand?

A
  • reductions in national insurance contributions
  • financial support for apprenticeship programs
  • extra funding for regional policy
39
Q

how does competitive policies increase labour demand?

A
  • reductions in coorporation tax
  • tax incentives for research/ innovation spending
  • enterprise policies to lift the rate of new business start ups
40
Q

What are the three policies to increase labour supply?

A
  • reducing occupational mobility
  • improving geographical mobility
  • stimulate stronger work incentives
41
Q

How does reducing occupational mobility increase labour supply?

A
  • better funding an more effective training
  • teaching new skills
  • expansion of apprentiships/ internships
42
Q

How does improving geographical mobility?

A
  • rise in house building wil help to keep property prices lower and encourage more affordable rents
  • active regional policy to create new jobs and businesses
43
Q

How does simulating stronger work incentives increase labour supply?

A
  • higher min wage
  • reduction in income tax
  • welfare reforms to reduce the risk of poverty trap

Economics A-level (35 decks)

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