3.2 Low unemployment Flashcards
• explain what is meant by employment and unemployment • explain how unemployment is measured using the Claimant Count • calculate the unemployment rate • analyse recent and historical unemployment figures • explain the types of unemployment, including cyclical, frictional, seasonal and structural unemployment • evaluate the causes and consequences of unemployment for individuals, regions and the government
What does the term ‘employment’ mean?
The use of labour in the economy to produce goods and services.
What does the term ‘unemployment’ mean?
Occurs when workers able and willing to work at the current wage rates are unable to find employment.
What does the term ‘full employment’ mean?
Occurs when an economy is using most of its workers to produce output.
What does the term ‘claimant count’ mean?
The method of measuring unemployment according to the number of people who are claiming unemployment-related benefits.
What does the term ‘level of unemployment’ mean?
The number of people in the working population who are unemployed
What does the term ‘rate of unemployment’ mean and how to calculate?
The percentage of the country’s workforce that is unemployed
the number of unemployed
—————————————– x 100
workforce
What does the term ‘seasonal unemployment’ mean?
Lack of employment caused by a fall in demand during a particular season.
What does the term ‘frictional unemployment’ mean?
Lack of unemployment caused by time lags when workers move between jobs.
What does the term ‘structural unemployment’ mean?
Unemployment caused by a permanent decline of an industry or industries.
What does the term ‘cyclical unemployment’ mean?
Lack of unemployment caused by a lack of demand in the economy.
What are the benefits of unemployment?
- Wage rate kept down for firms
- In turn, makes firm costs lower, increase competition internationally
What are the costs of unemployment for individuals?
- Lower living standards
- Loss of status and self-esteem
- Excluded workers (due to prolonged lack of experience)
- Costs to taxpayers (for those employed for funding benefits)
What are the costs of unemployment for government?
- Labour resources are wasted
- Unemployment leads to more unemployment (cyclical)
- A budget deficit
What are the costs of unemployment for regions?
- Unemployment is spread unevenly throughout the country
- Encourages people to move away from the ‘depressed’ area
