4.2.3.2 - Employment Flashcards
What are the 3 work status’
- employed
- unemployed
- economically inactive
Define employment
Being in paid work full or part time
Define unemployment
Those of a working age who are willing, able and available to work but do not have a job
Define economically active
People of working age who are in employment or are unemployed (pretty much everyone of working age)
Define economically inactive
People of a working age who are not seeking work ( eg: full time employment t or early retirement)
Define full employment
Where all those who are economically active and willing and able to work can find employment
Define involuntary unemployment
Workers are willing to work at current market wage rates but there are no jobs available
Voluntary unemployment
Workers choose to remain unemployed and refuse job offers at current market wage rates
Define level of unemployment
The number of people who are unemployed
Define the rate of unemployment
The number of people unemployed as a percentage of the labour force
2 ways in which unemployment is measured
- clairmont count
- labour force survey
What is the clairmont count
Measures the number of people claiming job seekers allowance and universal credit
What is the labour force survey
- a quarterly survey of approximately 60,000 households complied by the ONS
- unemployment is defined as “ actively looking for a job but have ben out of work for 4 weeks and are able to return to work within 2 weeks
main problems with the clairmont count
Can both underestimate and overestimate the unemployment statistics
How can the clairmont count underestimate unemployment statistics
- not everyone who is eligible claims benefits
- temporarily employed individuals cannot always claim benefits
- those under 18 and over 60 do not count
How can the clarion t count overestimate unemployment statistics
- some people who claim job seekers allowance and universal credit aren’t actively seeking work
- some people with jobs in the black market continue to claim benefits
Why is the labour force survey better than the clairmont count
- internationally recognised
- potential for analysis across countries
- picks up trends in different sectors
- better guide for policy makers
- generally acceptors to be a more accurate figure
Negatives about the labour force survey
- is costly to compile
- subject to sampling and extrapolation errors
What are the problems of measuring unemployment
- underemployment can also occur when individuals cannot find jobs suitable for their qualifications and experience, or cannot find enough hours to work
- hidden employment can also occur when people choose to stay in education rather than seek employment or when workers lose their jobs and don’t actively seek new jobs as the costs of seeking work isn’t worth it
- it is hard to measure that scale of inactivity
- sample errors can occur
When does both unemployment and employment increase
- increases in the population size
- a fall in the inactivity rate
What are the impacts of unemployment
- reduced demand for goods and services ( -be multiplier effect)
- lower living standards
- social costs ( v health and ^ crime)
- deskilling of the human capital ( reduced chances of finding work)
- reduced investment into the economy
- reduced tax revenue
- increased welfare spending
What are the benefits of unemployment
- falls in inflation
- pool of labour available for growing businesses
- rise in self employment which encourages enterprise due to a rise in innovation and independence
What are he 5 types of unemployment
- structural
- frictional
- seasonal
- cyclical
- real wage
What is demand side unemployment
Unemployment is due to a lack of AD
What is supply side unemployment
When unemployment is due to AS factors
What is structural unemployment
Supply side (long term)
- long term economic shifts lead to long term unemployment
- occurs as a result of occupational and geographical immobility
What is frictional unemployment
Supply side
- when workers are moving between jobs
- short term unemployment, it exists because workers do not have perfect and immediate information about every job opportunity that is available to them
- it is always likely to exist
What is cyclical unemployment
- demand side / demand deficient
- follows the cycle of the economy - when workers are in deprived demand
- occurs when there is a negative output gap
- as the economy cycles, the negative output gap will decrease so cyclical unemployment will decrease also
What is seasonal unemployment
- demand side
- people are unemployed at different times of the year
- due to their occupation being only useful at certain seasonal periods
What is real wage unemployment
- when the real wage rested are above the equilibrium wage rate
- an excess supply of labour is created as firms cannot afford to employ as many workers
- in a free labour market real wage rates would fall in these circumstances and the market would return to equilibrium
- HOWEVER distortions to the labour market such as the national min wage and trade union power can maintain real wage rates above the equilibrium
What is full employment
- the rate at which labour markets are in equilibrium
- there will be some residual levels pf frictional and structural unemployment at the equilibrium
