Ch29 Employment And Unemployment Flashcards
What are the 4 types of unemployment? And are they supply or demand side factors?
Frictional (supply)
Seasonal (supply)
Structural (supply)
Cyclical/demand deficient (demand)
3 factors that affect the number of works?
Population size
Activity rate
Net Migration
What are the 3 types of structural unemployment?
REGIONAL (living in wrong place for work)
SECTORAL (skilled workers but no work for them due to decline in their industry)
TECHNOLOGICAL (machines filling jobs)
What is frictional unemployment?
Short term unemployment (workers leave one job and start another)
What is seasonal unemployment?
Unemployment due to some jobs only being done in certain months (eg tourist industry workers)
What is is structural unemployment?
When the pattern of demand and production changes leaving workers unemployed in labour market where demand has shrunk.
What is cyclical, Keynesian, or demand-deficient unemployment?
When there is insufficient aggregate demand in the economy for all workers who wish to work at current wage rates to obtain a job.
Define activity (participation) rates?
The percentage or proportion of any given population in the labour force.
What is net migration?
Immigration minus emigration.
What 3 arguments are there against the anti immigration groups statement: ‘immigrants steal our jobs’?
Net immigration cause no. of jobs to increase.
Immigrants are often more flexible than domestic workers (move to where work is etc)
Immigrants are often underemployed (higher skill level than job they have)
What are the costs of unemployment to the unemployed and their dependants? (3)
Cost of loss of income
More likely to have mental/marital issues
Longer unemployed, less likely to be able to get a job
Why is long term unemployment hard to escape?
Lose skills over time so less likely to get a job
Employers use time unemployed to sift through applicants quickly
What is the cost to local communities of unemployment? (3)
Crime rates increase
Shops go out of business
Run down area due to high unemployment
What is the cost to taxpayers of unemployment? (2)
Benefits
No income tax paid, less VAT paid due to less consumption (due to less money)
What costs to the economy are there due to unemployment? (2)
More crime
Loss of output from unemployed workers
Define workforce?
People who work + those old enough and able to work.
Define level of employment?
Number of people in work.
Define rate of employment?
Proportion of people in work relative to size of workforce.
Define unemployed?
People willing and able to work but not employed (been out of work for 4weeks and is ready to start work in next 2weeks).
Define level of unemployment?
Number of workforce out of work.
Define rate of unemployment?
Proportion of people out of work relative to size of workforce.
5 factors that affect levels of unemployment?
School leaving age No. of school leavers entering higher education Level of net migration Availability of jobs Level of taxes and benefits
Way 1 of measuring level of unemployment?
LABOUR FORCE SURVEY
Face to face interview then quarterly telephone call with 60,000 households. Includes anyone over age of 16 (more inclusive than claimant count). However, data is always 6weeks out of date.
Way 2 of measuring unemployment?
Measure of unemployment which records no. of people claiming job seekers allowance.
Bad: not everyone unemployed claims JSA. Lots of criteria to fit.
Good: Quick to measure and publish.
What is the classical view to unemployment?
That there are only unemployed people who are not able and willing to work at the going wage rate. I.e. If people would accept lower wage rate they could all find jobs. Therefore, all unemployment is short term and laissez faire is the best solution.
Causes of demand deficient unemployment? (5)
TOO MUCH SAVING (leads to less work, leads to less spending, leads to less jobs - vicious circle)
Lack of business confidence
External shocks (oil price rises)
Increased use of imports from low wage economies
Structural unemployment
Cost to individuals of unemployment?
Loss of skill sets
Loss of morale
Less consumption and lower income
Lower SofL
Cost to firms of high unemployment?
Less consumption from people therefore less profit
However, lower staff turnover due to people being afraid of losing jobs
Costs to government of high unemployment?
Receives less tax
Pays more in JSA
