3.2 Employment And Unemployment Flashcards
Full employment definition
The level of employment were those who are economically active can find work if they are willing to except jobs at the going wage rate
What are the problems with the claimant count?
- people may have enough money to not be on JSA but still are unemployed
- contract workers don’t count
Effects on firms due to unemployment
- Larger supply of labour to employ from, causes wages to fall, reducing firms costs
- unemployed consumers, consume less due to less disposable income = decrease in demand
- producers which sell inferior good might see a rise is sales
- costs firms to retrain workers if they have been out of work for a long time
Effects on consumers due to unemployment
- less disposable income so living standards fall
- mental and physical health issues
- they could loose their existing skills if not fully utilised “de-skilled”
Effects on the government due to unemployment
- government have to spend out on job seekers allowance
- less revenue from income tax and VAT
What are the eight types of unemployment?
- cyclical
- frictional
- structural
- voluntary
- seasonal
- technological
- regional
- real wage
Cyclical unemployment definition
Unemployment caused by insufficient aggregate demand within the economy
When does cyclical unemployment occur?
During recession and negative output gaps
Frictional unemployment definition
Unemployment resulting from movements into and out of the job market
Seasonal unemployment definition
Unemployment arising in different seasons of the year
Structural unemployment definition
Unemployment resulting from mismatches between the labour supply available and the labour demand for differently skilled labour
Why might structural unemployment occur?
- deindustrialisation
- globalisation, cheaper manufacturing work abroad
- decline in industry’s eg. British steel
Technical unemployment definition
Unemployment occurring by the replacement of labour with automated production
Regional unemployment definition
Unemployment that occurs within particular towns, cities or regions
Voluntary unemployment definition
Where people are on willing to accept a job at the going wage rate despite there being jobs available
