economic issues: unemployment part I ( def, calc, types ) Flashcards
Aus UE rate
4.1% in april
participation rate
66.7% and rising
how many workers
14 million
inflation rate
3.6%
eco growth
1.5%
government intervention in managing UE
- 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 )
increases in Australia’s WAP:
- birth rate
- migration levels: govt’s skilled migration problems –> targeted aus NEEDED skills as edu in home country
- age distribution
- size of population
working age population definition
Refers to those 15 and over in the population.
labour force
Refers to those over 15 who are working or actively seeking work.
- Pool of available workers who are available to produce G+S
economic factors influencing the supply of labour
- 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
major groups not in labour force
Retirees ( 67 yrs old )
Rich
Given up looking
Stay at home-parents
unemployed definition
Refers to those over 15 who are not employed but willing, able and actively seeking work.
employed
Those over 15 working at least one hour a week paid ( can be unpaid family business ), or are on paid leave
unemployment rate
the percentage of people in the labour force who are unemployed.
Full Employment:
Occurs when cyclical UE is zero.
- The structural rate of unemployment
- occurs generally at value of the NAIRU
UE RATE measurement: total UE / LF ( employed + UE ) x 100
LF Participation Rate / WAP x 100/1
cyclical UE definition
Caused by contraction in aggregate demand. Results in fall in derived demand for labour through BC.
cyclical UE part II
- Big contributor during recessions
- policy response: stimulate AD
long term UE
Unemployed more than 12 months ( then out of touch with job market )
Policy Response: Retraining initiatives
structural UE defintion
Mismatch of skills of unemployed versus those needed in the economy. Caused by structural change ( in industry or region ).
Structural UE: Capital V Labour
Structural also if cost of labour exceeds cost of capital
Workers become UE if wage growth > productivity growth
structural UE policy response
Retraining initiatives for skill mismatch
Labour market reform to link wage growth to productivity
structural industry trends
- 1900: large proportion in agricultural and manufacturing
- 2000: large proportion in services
Seasonal Unemployment:
Related to frictional but caused by seasonal changes in specific industries cycle ( tourism, fruit picking )
Policy Response: Limited, promote other industries
Frictional Unemployment:
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
Hard Core Unemployment:
Caused by those people being incapable of performing well
Policy Response: Mostly retraining, workshops
Hidden Unemployment:
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
