economic issues: unemployment part I ( def, calc, types )

Question 1

Aus UE rate

Answer 1

4.1% in april

Question 2

participation rate

Answer 2

66.7% and rising

Question 3

how many workers

Answer 3

14 million

Question 4

inflation rate

Answer 4

3.6%

Question 5

eco growth

Answer 5

1.5%

Question 6

government intervention in managing UE

Answer 6

• fiscal policy: Government has influence over government spending component ( G ) of AD to move closer to full employment
• monetary policy: Indirectly, ↓ interest rates, ↑ consumption + investment spending ( by consumers + businesses )

Question 7

increases in Australia’s WAP:

Answer 7

• birth rate
• migration levels: govt’s skilled migration problems –> targeted aus NEEDED skills as edu in home country
• age distribution
• size of population

Question 8

working age population definition

Answer 8

Refers to those 15 and over in the population.

Question 9

labour force

Answer 9

Refers to those over 15 who are working or actively seeking work.
- Pool of available workers who are available to produce G+S

Question 10

economic factors influencing the supply of labour

Answer 10

• wages and incentives ( salary, bonuses )
• working conditions + non-financial incentives
• education + qualifications ( high level jobs limit the number of potential candidates and supply )
• institutions: trade unions
• geographic + occupational mobility

Question 11

major groups not in labour force

Answer 11

Retirees ( 67 yrs old )
Rich
Given up looking
Stay at home-parents

Question 12

unemployed definition

Answer 12

Refers to those over 15 who are not employed but willing, able and actively seeking work.

Question 13

employed

Answer 13

Those over 15 working at least one hour a week paid ( can be unpaid family business ), or are on paid leave

Question 14

unemployment rate

Answer 14

the percentage of people in the labour force who are unemployed.

Question 15

Full Employment:

Answer 15

Occurs when cyclical UE is zero.
- The structural rate of unemployment
- occurs generally at value of the NAIRU

Question 16

UE RATE measurement: total UE / LF ( employed + UE ) x 100

Answer 16

LF Participation Rate / WAP x 100/1

Question 17

cyclical UE definition

Answer 17

Caused by contraction in aggregate demand. Results in fall in derived demand for labour through BC.

Question 18

cyclical UE part II

Answer 18

• Big contributor during recessions
• policy response: stimulate AD

Question 19

long term UE

Answer 19

Unemployed more than 12 months ( then out of touch with job market )
Policy Response: Retraining initiatives

Question 20

structural UE defintion

Answer 20

Mismatch of skills of unemployed versus those needed in the economy. Caused by structural change ( in industry or region ).

Question 21

Structural UE: Capital V Labour

Answer 21

Structural also if cost of labour exceeds cost of capital
Workers become UE if wage growth > productivity growth

Question 22

structural UE policy response

Answer 22

Retraining initiatives for skill mismatch
Labour market reform to link wage growth to productivity

Question 23

structural industry trends

Answer 23

• 1900: large proportion in agricultural and manufacturing
• 2000: large proportion in services

Question 24

Seasonal Unemployment:

Answer 24

Related to frictional but caused by seasonal changes in specific industries cycle ( tourism, fruit picking )
Policy Response: Limited, promote other industries

Question 25

Frictional Unemployment:

Answer 25

Caused by those moving between jobs, or those transitioning or re-entering into the workforce.
Ie; school leavers, returning mothers
Policy Response: Limited, mostly retraining

Question 26

Hard Core Unemployment:

Answer 26

Caused by those people being incapable of performing well
Policy Response: Mostly retraining, workshops

Question 27

Hidden Unemployment:

Answer 27

Not counted as unemployed due to not actively seeking
- May be tempted or pushed into labour force
- Labour’s excess capacity for production
- Policy Response: reduce welfare, higher minimum wage, stimulate EG