4.7 Employment and unemployment Flashcards
Define employment. [2]
Employment refers to the economic use of labour as a factor of production [1], it also includes people who are self-employed [1].
Why is high employment a key macroeconomic objective? [6]
- Increases standard of living
- Promotes economic growth
- Increases tax revenues
- Reduces the government’s financial burden
- Prevent lost of skilled labour
- Reduces wealth inequality
Define full employment. [1]
Full employment refers to the ideal situation when everyone in a country who is willing and able to work has a job [1].
What are the changing patterns and levels of employment? [6]
- Delayed entry to the workforce
- Ageing population
- Higher female participation rates
- More flexible working patterns
- More formal sector employment
- Less public sector employment
Define formal sector employment. [3]
Formal sector employment refers to officially recorded employment [1], where workers pay income taxes [1] and contribute to the country’s official GDP [1].
Define female participation rate. [2]
The female participation rate measures the proportion of women who are active in the labour force [1]. As an economy develops, there is a higher female participation rate [1].
What are the two main ways of measuring unemployment? [2]
The claimant count [1] and labour force survey [1].
Define claimant count. [2]
The claimant count measures the number of people who are out of work [1] and claiming unemployment benefits [1].
Define labour force survey. [2]
The labour force survey uses the ILO’s standardised household-based survey [1] to collect work-related statistics [1].
Define unemployment rate. [2]
The unemployment rate is a measure of the percentage of a country’s workforce [1] that is out off employment [1].
What are the types of unemployment. [3]
- Frictional unemployment
- Structural unemployment
- Cyclical unemployment
Define frictional unemployment. [2]
Frictional unemployment is transitional unemployment [1] which occurs when people change jobs or are in-between jobs [1].
Define structural unemployment. [2]
Structural unemployment occurs when the demand for products produced in a particular industry continually falls [1], often due to foreign competition [1].
Define cyclical unemployment. [2]
Cyclical unemployment is unemployment caused by a lack of demand [1], which causes a fall in national income [1].
How can a cyclical unemployment be shown in a demand supply of national product curve? [1]
There will be a leftward shift of the demand curve [1].
What are the consequences of unemployment? [7]
- Unemployed individuals suffer from mental health issues
- Unemployed individuals’ families and friends suffer from lower income
- Higher level of poverty and crime rates, and lower house prices in the local community
- Firms lose money due to less consumer spending, cause business failures
- Government needs to spend more on welfare
- Government increases reliance on taxpayers’ money
- Lower GDP in the whole economy and becomes less internationally competitive
How can the use of fiscal policy reduce unemployment? [4]
The government can reduce the level of taxation [1] to boost the level of consumption [1], which increases the real GDP [1] and brings more employment opportunities [1].
How can the use of monetary policy reduce unemployment? [4]
The government can lower the interest rate [1] which reduces the cost of borrowing [1], encourages households and firms to spend and invest [1], and causes a higher demand on labour [1].
How can the use of protectionist measures reduce unemployment? [2]
The government can add more regulations such as quotas and tariffs [1], which safeguard the domestic jobs from the threat of international competition [1].
What are the policies which help to reduce unemployment? [4]
- Fiscal policy
- Monetary policy
- Supply-side policy
- Protectionist measures
How can the use of supply-side policy reduce unemployment? [2]
The government can invest in education and training [1], which helps unemployed people to work in the tertiary sector [1].
The government can reduce the power of trade unions [1],which help to reduce unemployment as trade union members will be harder to have strikes [1].
The government can offer firms to train and hire long-term unemployed people [1], which will reduce the unemployed people in the economy [1].
The government can reduce welfare benefits [1], which gives unemployed people incentives to find a job [1].
