3.2 Low unemployment Flashcards
What is meant by employment?
When people who are willing an able to work can find a job. (it also refers to the use of labour in a country to produce goods and services.)
What is meant by unemployment?
When people who are willing and able to work cant find jobs.
When does full employment occur
When everyone willing to work gets a job. in other words, when an economy is using most of its workers to produce output.
What do people who are willing and able to work make up?
The labour force or workforce
What do wages do?
Incentivise and motivate people to work
Which people are not included in the workforce or unemployment figures?
People who are economically inactive
Which people does economically inactive include?
pensioners, full-time students, those who are sick or looking after family full time
What is claimant count?
A method of measuring unemployment using the number of people who claim unemployment-related benefits. the benefits include jobseekers benefits and universal credit
What are benefits?
A way for those without jobs to get money to pay for essential goods and services.
What is the formula for calculating the unemployment rate?
Unemployment rate= (number of unemployed over workforce) x 100`
What is meant by the unemployment rate?
The % of the workforce without a job
Do unemployment rates and level move in the same direction ?
No.
What does an increase in unemployment rate over time mean?
That economic growth is slowing down or has become negative, therefore less workers are needed to produce less output.
What does a decrease in unemployment rate over time mean?
That there is economic growth so more workers are needed to produce the more output.
What does it mean when data shows the rate of unemployment rising significantly over time?
It means that its very likely the country is experiencing a slow down in economic growth. it may even indicate a recession, where economic growth is negative.
What is cyclical unemployment?
Caused by problems in the economy, so total demand falls and fewer workers are needed to make less output.
What frictional unemployment?
Caused when people are between jobs for a short time i.e. someone has left a job and is due to start a new one soon
What is seasonal unemployment?
Caused when labour is only demanded at certain times of the year.
What is structural unemployment?
Caused due to changes in supply and demand. In other words, workers without employment due to the decline of an industry
What are the 4 benefits of unemployment?
-Easier to recruit: if there are more workers looking for employment, it is easier for firms to find new workers.
-Dynamic economy: unemployed workers help an economy to be responsive if they can move from one industry to another as demand patterns change.
-International competitiveness: workers may have to accept lower wage rates to get a job, which reduces costs for firms , meaning they can lower prices and be more price competitive against overseas firms.
Inflation: lower wages means people have less money to spend and can afford less, so there is less demand for goods, resulting in lower prices levels in general.
What are the 4 costs of unemployment for individuals?
- lower standard of living as they have less income so can afford fewer goods and services that contribute to their well being
- lower income as unemployment benefits are very low and wages are pushed down due to the surplus of workers
- lower standard of living sue to less income tax revenue, the gov may cut spending on services
- income tax may increase for those employed in order that the gov can raise money to pay increased benefits.
What are the 4 costs of unemployment for governments?
- lower output that potential as one one factor of production (labour) is not being fully used.
- budget deficit: the gov may spend more than it receives in tax revenue due to increasing costs (such as benefits)
- increased health problems due to unemployed having less money to spend on health care
- cycle of unemployment: lower incomes lead to lower consumption, leads to less total demand, leads to fewer workers needed to make less output, leads to increased unemployment.
What are the 2 costs of unemployment for the regions?
- due to decline in specific industry a region may have higher costs and need help from the government
- shops and services may close sue to the negative impacts of high unemployment such as low incomes and less demand.
