4.2.3.2 - Employment

Question 1

What are the 3 work status’

Answer 1

• employed
• unemployed
• economically inactive

Question 2

Define employment

Answer 2

Being in paid work full or part time

Question 3

Define unemployment

Answer 3

Those of a working age who are willing, able and available to work but do not have a job

Question 4

Define economically active

Answer 4

People of working age who are in employment or are unemployed (pretty much everyone of working age)

Question 5

Define economically inactive

Answer 5

People of a working age who are not seeking work ( eg: full time employment t or early retirement)

Question 6

Define full employment

Answer 6

Where all those who are economically active and willing and able to work can find employment

Question 7

Define involuntary unemployment

Answer 7

Workers are willing to work at current market wage rates but there are no jobs available

Question 8

Voluntary unemployment

Answer 8

Workers choose to remain unemployed and refuse job offers at current market wage rates

Question 9

Define level of unemployment

Answer 9

The number of people who are unemployed

Question 10

Define the rate of unemployment

Answer 10

The number of people unemployed as a percentage of the labour force

Question 11

2 ways in which unemployment is measured

Answer 11

• clairmont count
• labour force survey

Question 12

What is the clairmont count

Answer 12

Measures the number of people claiming job seekers allowance and universal credit

Question 13

What is the labour force survey

Answer 13

• 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

Question 14

main problems with the clairmont count

Answer 14

Can both underestimate and overestimate the unemployment statistics

Question 15

How can the clairmont count underestimate unemployment statistics

Answer 15

• not everyone who is eligible claims benefits
• temporarily employed individuals cannot always claim benefits
• those under 18 and over 60 do not count

Question 16

How can the clarion t count overestimate unemployment statistics

Answer 16

• 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

Question 17

Why is the labour force survey better than the clairmont count

Answer 17

• 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

Question 18

Negatives about the labour force survey

Answer 18

• is costly to compile
• subject to sampling and extrapolation errors

Question 19

What are the problems of measuring unemployment

Answer 19

• 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

Question 20

When does both unemployment and employment increase

Answer 20

• increases in the population size
• a fall in the inactivity rate

Question 21

What are the impacts of unemployment

Answer 21

• 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

Question 22

What are the benefits of unemployment

Answer 22

• 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

Question 23

What are he 5 types of unemployment

Answer 23

• structural
• frictional
• seasonal
• cyclical
• real wage

Question 24

What is demand side unemployment

Answer 24

Unemployment is due to a lack of AD

Question 25

What is supply side unemployment

Answer 25

When unemployment is due to AS factors

Question 26

What is structural unemployment

Answer 26

Supply side (long term)

• long term economic shifts lead to long term unemployment
• occurs as a result of occupational and geographical immobility

Question 27

What is frictional unemployment

Answer 27

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

Question 28

What is cyclical unemployment

Answer 28

• 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

Question 29

What is seasonal unemployment

Answer 29

• demand side
• people are unemployed at different times of the year
• due to their occupation being only useful at certain seasonal periods

Question 30

What is real wage unemployment

Answer 30

• 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

Question 31

What is full employment

Answer 31

• the rate at which labour markets are in equilibrium
• there will be some residual levels pf frictional and structural unemployment at the equilibrium