3.2 Low Unemployment Flashcards
What is meant by employment?
When people who are willing and able to work can find a job.
What is the purpose of the labour factor of production?
To produce goods and services.
What is the reward for labour and what is it used for?
Wages are a main source of income and are used to pay for essential goods and services.
What is full employment?
When everyone willing to work is able to find a job.
What is unemployment?
When people (above 16) are willing and able to work, cannot find a job.
What people are not included in workforce or unemployment figures?
- Pensioners
- Full-time students
- Sick
- Family carers
How is the level of unemployment measured?
Through Claimant Count.
What is Claimant Count?
It is a measurement of unemployment which records the number of people claiming unemployment-related benefits such as universal credit and jobseeker’s allowance.
How do people claim unemployment-related benefits?
They have to register for them.
What is the difference between unemployment rate and unemployment level?
The unemployment rate is the percentage of a country’s workforce that is unemployed, however the unemployment level is the number of people who are without a job.
How is the unemployment rate calculated?
(Number of unemployed ÷ workforce) × 100
What are the four types/causes of unemployment?
- Cyclical
- Frictional
- Seasonal
- Structural
What is cyclical unemployment?
It is caused by problems in the economy, so total demand falls. Therefore, fewer workers are needed due to a fall in aggregate demand.
What is frictional unemployment? Give an example.
When workers are ‘between jobs’ for a short time. Eg: someone has left a job to start a new one soon.
What is seasonal unemployment? Give an example.
When workers are without jobs because their labour is only demanded at certain times of the year. Eg: ice cream sellers.
What is structural unemployment? Give an example.
Workers without employment due to a decline in industry. Eg: steel production in the UK.
What are three benefits of unemployment?
- It is easier to recruit if more people are looking for employment
- Workers may have to accept lower wages to get a job, making firms more competitive internationally
- Lower wages means individuals have to buy less, lowering inflation
What are three costs of unemployment to individuals?
- Lower standard of living as individuals have less income, so can only afford a few goods and services
- May be excluded as firms don’t want to hire the long-term unemployed
- Taxes increase for the employed to pay unemployment benefits
What are three costs of unemployment to the government?
- Budget deficit due to increased expenditure on unemployment benefits and decreased income tax revenue
- Lower output, so labour is being wasted
- Can incur more costs, such as health problems due to the employed having less money to spend on healthy food
What are two costs of unemployment to regions?
- A region may need more help from the govermnent if industry has declined in that region
- Can lead to low regional standard of living, resulting in shops closing because of lack of spending
