CH35 Employment and unemployment Flashcards

Question

what is one cause of real wage unemployment?

Answer 1

the minimum wage. -unemployed workers might be prepared to work for less than the minimum wage. Employers might be prepared to take on more workers but only if they could pay workers less than the minimum wage. However, the fact that employers are legally not allowed to pay workers less than the minimum wage means that those unemployed workers cannot get a job.

Answer 2

another cause of real wage unemployment is unemployed workers refusing to take low paid jobs because they can receive more in welfare benefits than working.

Answer 3

it is caused by a lack of demand in the economy

Answer 4

they are caused by supply side factors

Answer 5

they include frictional, structural and seasonal unemployment

Answer 6

-Women tend to have lower activity rates than men in rich industrialised economies. This is mainly due to women still being far more likely than men to give up their jobs to look after their children. Bringing more women into the labour force increases recorded GDP and so increases growth rates. It also increases tax revenues. It can also reduce welfare benefits where women are living in low income households. However, staying at home and looking after children in itself is a benefit to society even if it is not recorded in GDP -Older workers, particularly over the age of 60, have lower activity rates. Many have retired even before they reach the state retirement age. Govs in Europe have been raising the retirement age in order to reduce the amount of gov spending on pensions. At the same time, they have been encouraging workers to stay in work or get a new job rather than retire -Many govs in the past, including the UK government, have reduced politically sensitive unemployment rates by reclassifying some of the long-term unemployed as being unable to work due to disability. The result has been a significant increase in the amount spent on welfare benefits and lost output for the economy.

Answer 7

the UK has seen a large increase in immigration, partly from countries in Eastern Europe

Answer 8

studies show that immigrants to the UK are more likey to be employed and less likely to claim benefits than the existing population. -this is not surprising since the majority of immigrants come to the UK to work and are of working age. They tend to take jobs which are below these workers' skill levels and so represent goof value for UK employers -due to the circular flow of income, the spending of these workers creates further jobs in the UK. Total UK employment increases without an increase in unemployment.

Answer 9

-it can be argued that net inward migration depresses wage rates, in particular low wages. The ability of UK firms to recruit foreign workers means that the supply of labour is increased, reducing the equilibrium price of labour, the wage rate. -it can also be argued that UK workers with few skills are most affected by inward migration. This is because they are competing in the job market with migrants who are well motivated, have work skills and are prepared to work for low wages. UK workers who have low motivation to work, few skills and prefer to receive welfare benefits rather than work for the minimum wage can find themselves at a disadvantage when there is a plentiful supply of immigrant workers. (Evaluation: however, even if there is not immigration there will always be someone who is better motivated and has more skills. So these less motivate and less skilled people shouldn't be blaming immigration but rather should try and focus on improving themselves so that they have more chances of being employed)

Answer 10

-there is a loss of income that could have been earned had the person been in a job. Offset against this is the value of any benefits that the worker might receive and any value placed on the extra leisure time which an unemployed person has at his or her disposal. -evidence suggests that unemployed people and their families suffer in a number of other ways. One simple but very important problem for them is the stigma of being unemployed. Unemployment is often equated with failure both by the unemployed themselves and by society in general. Many feel degraded by the whole process of signing on, receiving benefits and not being able to support themselves or their families. -Studies suggest that the unemployed suffer from high levels of stress, marital breakdown, suicide, physical illness and mental instability, and that they have higher death rates compared with those in employment.

Answer 11

yes. -many will lose some earnings, although a few who receive large redundancy payments may benefit financially from having lost their job. The social and psychological costs are likely to be limited too

Answer 12

-evidence suggests that the longer period out of work, the less likely it is that the unemployed person will find a job. -there are two reasons for this: first, being out of work reduces the human capital of workers. They lose work skills and are not being trained in the latest developments in their occupation. Second, employers use length of time out of work as a crude way of sifting through applicants for a job. For an employer, unemployment is likely to mean that the applicant is, to some extent, deskilled. -there is a fear that the unemployed worker will not be capable of doing the job after a spell of unemployment. It could show that the worker has personality problems and might be a disruptive employee. It could also be an indication that other employers have turned down the applicant for previous jobs and hence it would be rational to save time and not consider the applicant for this job

Answer 13

-costs of unemployment to local communities are more difficult to establish. -some have suggested that unemployment, particularly amongst the young, leads to increased crime, violence on the streets and vandalism. -areas of high unemployment tend to become run down. Shops go out of business. Households have no spare money to look after their properties and their gardens. Increased vandalism further destroys the environment

Answer 14

-the gov has to pay out increased benefits. -on the other hand, the gov loses revenue because these workers would have paid taxes if they had been employed. For instance, they would have paid income tax and national insurance contributions on their earnings. They would have also paid more in VAT and excise duties because they would have been able to spend more. -govs also provide help to the unemployed to get a job. They might provide information about available jobs, such as through Job Centres in the UK. They may provide training schemes or subsidise employers who take on unemployed workers.

Answer 15

-taxpayers paying money to the unemployed is not a loss for the economy as a whole. It is a transfer payment which redistributes existing resources within the economy. -the actual loss to the whole economy is two-fold. First, there is the loss of output which those workers now unemployed could have produced had they been in work. The economy could have produced more goods and services which would then have been available for consumption. Second, there are the social costs such as increased violence and depression which are borne by the unemployed and the communities in which they live.

Answer 16

-the unemployed as consumers lose out because they are able to spend less. Consumers in areas of high unemployment also lose out because local shopping centres tend to be run down and dont offer the range of shops available to those in areas of low unemployment

Answer 17

firms suffer because unemployment represents a loss of demand in the economy. If there were full employment, the economy would be more buoyant and there would be more spending. Long term unemployment also reduces the pool of skilled workers that a firm could hire.