3.b Flashcards
Types of unemployment ?
- Seasonal unemployment.
- Frictional unemployment.
- Structural unemployment.
- What is seasonal unemployment ?
seasonal fluctuations in unemployment that results from the seasonality associated with some jobs and sectors leads to high demands for workers but workers may be laid off during the slack or off-season peroids.
- Frictional unemployment ?
Frictional unemployment is unemployment that arises from normal labour market turnover.
= results from the time it takes to match workers with jobs.
Job search ?
Job search means there must always be some umemployment.
voluntary unemployment ?
Voluntary unemployment is where people choose to remain unemployment rather than take jobs which are available.
Involuntary unemployment ?
Involuntary unemployment is where people want work at the going market wage rates but cannot find employment.
Job creation ?
job creation occurs when businesses grow and when new businesses start-up => increase in job availability.
Job destruction ?
Job destruction occurs when businesses fail or exit the market, down-size or rationalize => increase in unemployed workers searching for new jobs.
- Structural unemployment ?
structural unemployment is unemployment created by changes in technology and international competition that change the skills needed to perform jobs or the locations of jobs.
A ] Occupational immobility ?
B] Geographic immobility ?
A] Occupational immobility = requires skills and experience they do not possess.
B] Geographic immobility = are not in the immediate region where they live.
Technological change ?
Technological change => winners and losers
those that lose out are those whose knowledge skills and experience are now obsolete.
Structural change in the economy ?
Structural change in the economy over time structural changes affect threw make-up of economics.
it can be caused by competition from abroad [ cheaper imports ] or by technology in trends.
Cyclical unemployment ?
Cyclical unemployment is the deviation of actual unemployment from the natural rate of unemployment.
Natural unemployment ?
Natural unemployment is the unemployment that arises from frictions and structional change when there is no cyclical unemployment.
National rate of unemployment ?
National rate of unemployment is natural unemployment as a percentage of the labour force.
The national rate of unemployment is the rate of unemployment that does not go away on its own, even in the long run.
Full employment ?
full employment occurs when there is no cyclical unemployment or equivalently, when all unemployment is frictional and structural.
The unemployment rate when the economy is at full employment is called the natural rate of unemployment.
Hysteresis ?
Hysteresis refers to the long-term effects that can occur following a recession or a shock
=> the longer people are without work the less likely they are to be hired by firms.
What is NEET ratio ?
NEET ratio = % of young people not in employment, education or training.
A ] Possible reasons for an increased structural U ?
B ] Possible reasons for higher or prolonged frictional U ?
A ] Possible reasons for an increased structural U :
i ) The minimum wage.
ii ) Trade unions.
iii ) Efficiency wages.
B ] Possible reasons for higher or prolonged frictional U :
iv ) Tax wedges
v ) The social welfare system and the replacement ratio.
Replacement rate ?
Replacement rate is the amount of in-work income that is replaced by the social welfare system when an individual becomes unemployed.
formula for Replacement ratio ?
Replacement ratio = net income while unemployed over net income while employed.
Formula for Replacement rate as a %
Replacement rate % = net income while unemployed over net income while employed x100
