Ch29 Employment And Unemployment

Question 0

What are the 4 types of unemployment? And are they supply or demand side factors?

Answer 0

Frictional (supply)
Seasonal (supply)
Structural (supply)
Cyclical/demand deficient (demand)

Question 1

3 factors that affect the number of works?

Answer 1

Population size
Activity rate
Net Migration

Question 2

What are the 3 types of structural unemployment?

Answer 2

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)

Question 3

What is frictional unemployment?

Answer 3

Short term unemployment (workers leave one job and start another)

Question 4

What is seasonal unemployment?

Answer 4

Unemployment due to some jobs only being done in certain months (eg tourist industry workers)

Question 5

What is is structural unemployment?

Answer 5

When the pattern of demand and production changes leaving workers unemployed in labour market where demand has shrunk.

Question 6

What is cyclical, Keynesian, or demand-deficient unemployment?

Answer 6

When there is insufficient aggregate demand in the economy for all workers who wish to work at current wage rates to obtain a job.

Question 7

Define activity (participation) rates?

Answer 7

The percentage or proportion of any given population in the labour force.

Question 8

What is net migration?

Answer 8

Immigration minus emigration.

Question 9

What 3 arguments are there against the anti immigration groups statement: ‘immigrants steal our jobs’?

Answer 9

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)

Question 10

What are the costs of unemployment to the unemployed and their dependants? (3)

Answer 10

Cost of loss of income
More likely to have mental/marital issues
Longer unemployed, less likely to be able to get a job

Question 11

Why is long term unemployment hard to escape?

Answer 11

Lose skills over time so less likely to get a job

Employers use time unemployed to sift through applicants quickly

Question 12

What is the cost to local communities of unemployment? (3)

Answer 12

Crime rates increase
Shops go out of business
Run down area due to high unemployment

Question 13

What is the cost to taxpayers of unemployment? (2)

Answer 13

Benefits

No income tax paid, less VAT paid due to less consumption (due to less money)

Question 14

What costs to the economy are there due to unemployment? (2)

Answer 14

More crime

Loss of output from unemployed workers

Question 15

Define workforce?

Answer 15

People who work + those old enough and able to work.

Question 16

Define level of employment?

Answer 16

Number of people in work.

Question 17

Define rate of employment?

Answer 17

Proportion of people in work relative to size of workforce.

Question 18

Define unemployed?

Answer 18

People willing and able to work but not employed (been out of work for 4weeks and is ready to start work in next 2weeks).

Question 19

Define level of unemployment?

Answer 19

Number of workforce out of work.

Question 20

Define rate of unemployment?

Answer 20

Proportion of people out of work relative to size of workforce.

Question 21

5 factors that affect levels of unemployment?

Answer 21

School leaving age
No. of school leavers entering higher education
Level of net migration
Availability of jobs
Level of taxes and benefits

Question 22

Way 1 of measuring level of unemployment?

Answer 22

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.

Question 23

Way 2 of measuring unemployment?

Answer 23

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.

Question 24

What is the classical view to unemployment?

Answer 24

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.

Question 25

Causes of demand deficient unemployment? (5)

Answer 25

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

Question 26

Cost to individuals of unemployment?

Answer 26

Loss of skill sets
Loss of morale
Less consumption and lower income
Lower SofL

Question 27

Cost to firms of high unemployment?

Answer 27

Less consumption from people therefore less profit

However, lower staff turnover due to people being afraid of losing jobs

Question 28

Costs to government of high unemployment?

Answer 28

Receives less tax

Pays more in JSA