7. Unemployment

Question 1

Unemployment rate

Answer 1

number of unemployed/labour force x 100

Question 2

labour force

Answer 2

sum of employed and employed

Question 3

definition of unemployed

Answer 3

all people in working-age population were available for work and was searching for work or had a job about to start

Question 4

labour force participation rate :

Answer 4

labour force/adult population x 100

Question 5

examples of difficult to distinguish between unemployed and someone who is not in the labour force

Answer 5

Discouraged workers, people who would like to work but have given up searching

people claiming unemployment benefits when they aren’t actually searching for a job

Question 6

most unemployment observed at any time is

Answer 6

long term

Question 7

frictional unemployment

Answer 7

unemployment due to the time that it takes to match workers with jobs

Question 8

structural unemployment

Answer 8

number of jobs in a labour market is less than the number of people that wants a job

Question 9

effect of government-run employment agencies

Answer 9

increases the job finding rate as information about job vacancies are given out, matching workers to jobs faster

Question 10

effect of public training program

Answer 10

ease transition of workers from declining to growing industries, increasing job finding rate

Question 11

what causes frictional unemployment?

Answer 11

sectorial shifts, change in demand of an industry

Question 12

effect of unemployment benefit

Answer 12

decreases job finding rate, increases job separation rate

Question 13

(3) reasons for structural unemployment

Answer 13

minimum wage lawys
unions
efficiency wages

Question 14

minimum wage effects

Answer 14

creates surplus of labour -> unemployment. It has a worse impact on low wage earners as it is harder to find low-wage jobs.

Question 15

employment contract act

Answer 15

any benefit that employers give to employees are given to everyone - insiders and outsiders for unions. NOW outsiders are only unemployed.

Question 16

negative effects of trade unions

Answer 16

increasing wage above equilibrium wages resulting in unemployment. Before the employment contract act, it benefited some workers at the cost of others.

Question 17

positive effects of trade unions

Answer 17

combat the imbalance of power - employers have more power. Unions can be important for helping firms respond efficiently to workers’ concerns. (ie unsafe working conditions)

Question 18

usefulness of unions

Answer 18

not so useful nowadays, esp after the employment contract act (now it is more of a drag to reduction of productivity)

Question 19

employment relations act

Answer 19

“personal grievance”employee can take employer to court if they think it is unfair that they were fired on probation (firm has to spend a lot of money to fight)

REDUCES chance of risking putting someone on probation

Question 20

employment relations act effect

Answer 20

affects low skill, young people, immigrants as they are regarded as a risk/unsure

Question 21

efficiency wages

Answer 21

paying higher than equilibrium wages: (VERY COMMON)
reduce risk of bad work ethic, don’t know how they will perform

worker health (better diet)
worker turnover (less likely for worker to leave)
worker quality (attracts better workers)
worker effort (motivated)

Question 22

shirkers

Answer 22

workers that avoid work or responsibility

Question 23

first efficiency wages

Answer 23

HENRY FORD: cost cutting by doubling wages: don’t turnover, work hard, don’t shirk.