6.2 – Employment and Unemployment Flashcards
What is Labour Force?
The working population of an economy, i.e. all people of working age who are willing and able to work.
What is Labour force participation rate?
The percentage of the labour force who are either working or looking for work.
What is Unemployment Rate?
The percentage of people in the labour force that are without work and are thus unemployed.
What is Dependent population
People not in the labour force and thus depend on the labour force to supply them goods and services to fulfill their needs and wants.
What are the causes of Unemployment?
Frictional unemployment: this occurs as a result of workers leaving one job and spend time looking for a new one.
Seasonal unemployment: this occurs as a result of the demand for a product being seasonal.
Cyclical unemployment: this occurs as a result of fall in aggregate demand due to an economic recession.
Structural unemployment: this occurs due to the long-term change in the structure of an economy.
Technological unemployment: this has rose in recent times as industrial robot, machinery and other technology have substituted for labour.
What are the Consequences of Unemployment?
People will need to rely on charity or government unemployment benefits to support themselves.
Public expenditure on other projects such as schools, roads etc will have to be cut down to make way for benefits. There is opportunity cost involved here.
The economy doesn’t reach their maximum productive capacity.
What are the Imperfections in The Labour Market?
Powerful trade unions may force up wages Unemployment benefits may reduce incentive to work Lack of information Minimum wage legislation Labour immobility
