Employment

Question 1

Unemployment Level

Answer 1

Number of people who are looking for jobs but cannot find one

Question 2

Employment Rate

Answer 2

A % of those unemployed vs in the labour force.

Question 3

Claimant Count (Def + Pros/Cons)

Answer 3

The number of people claiming JSA, Universal Credit.

Pros - Easy / Cheap to collect

Cons - Govt. can manipulate who can claim benefits to alter unemployment figure, excludes those unable to claim benefits.

Question 4

Labour Force Survey (Def + Pros/cons)

Answer 4

Sample Population - Asked those who are not working if they are looking for work.

Pros - More accurate than CC, International accepted method

Cons - Expensive to collect, The sample may be unrepresenative

Question 5

Structural Unemployment

Answer 5

Occurs when the demanded markets do not match the skills of the workforce.

Question 6

Cyclical Unemployment

Answer 6

Caused by falling AD due to the economic cycle

Question 7

Seasonal Unemployment

Answer 7

Unemployment that occurs due to changing demand patterns throughout the year, eg. Xmas

Question 8

Frictional Unemployment

Answer 8

When people are unemployed for short time periods between jobs.

Question 9

Geographical Immobility

Answer 9

When FoP cannot commute to where they are needed, eg. due to weak infrastructure, cost of living

Question 10

Occupational Immobility

Answer 10

When labourers’ skills cannot be transferred to the desired market.

Question 11

Real Wage Unemployment

Answer 11

When wages are set above the equilibrium price, eg. trade unions or NMW, leading to workers being let go.

Question 12

Natural Rate of Unemployment (NRU)

Answer 12

The level of unemployment experienced when the labour market is in equilibrium.

This is determined by the quality and quantity of factors of production + the factor mobility

Question 13

Non-Accelerating Inflationary Rate of Unemployment (NAIRU)

Answer 13

The lowest rate of unemployment that can be achieved in the long run, without increasing inflation.

Question 14

Demand-Side Policy to reduce Cyclical Unemployment

Answer 14

Boost AD during recessions (for Cyclical Unemployment)
Expansionary FP / MP
Information Provision

Question 15

Supply-side Policy to reduce Structural/ Frictional Unemployment

Answer 15

Improving Labour Flexibility - 1. Labour Mobility, 2. Wage Mobility + 3. Flexible work arrangements

Reduced power of TU / NMW = firms offer lower wages in recession, rather than unemployment

Improve Information Provision

Supply-side policy

Question 16

Consequences of unemployment (individuals)

Answer 16

Falling disposable income / consumption
Increased poverty (absolute / relative)
Falling living standards - less willing/able to consume
Uncertainty

Question 17

Consequence of high unemployment (economy)

Answer 17

Signals an ineffective Govt.
Unattractive to investment / low confidence
high crime rates
Increased welfare spending - increase budget deficit
Electoral unpopularity