employment and unemployment

Question 1

what is structural employment

Answer 1

long term shift to the market - mismatch so these workers will therefore need to re-train and gain new skills in order to find employment
This of course, will take time and may be costly

Question 2

cyclical employment

Answer 2

This is heavily linked to the economic cycle and occurs when there is a negative output gap
It indicates that demand is low (sometimes referred to as demand-deficient unemployment
As the economy recovers and moves towards a positive output gap, cyclical unemployment will reduce.

Question 3

what is voluntary employment

Answer 3

is when it is your choice to be unemployed

Question 4

what is involuntary employment

Answer 4

when they increase the mimumum wage age for example due to govemrnet

Question 5

can employment and unemployment go up at the same time

Answer 5

Employment and unemployment can go up at the same time due to immigration, birth rate and pension age. But no at the same time because of the formula.

Question 6

what are the effects of unemployment on firms

Answer 6

¥Reduced demand for goods/services
¥Reduced productivity
¥Reduced profitability
¥Less incentive to invest
¥Reduced morale and productivity of remaining workforce who are perhaps concerned over future potential job losses

Question 7

what are the effect on workers/ consumers

Answer 7

¥Lower living standards
ØThe unemployed will have lower incomes, meaning a reduced standard of living
¥Social costs
ØUnemployment can enhance the likelihood of illnesses such as depression and cause marital stress as strains are placed on family finances
¥Financial costs
ØLooking for work incurs a time cost
ØMore time spent at home may increase utility bills
¥De-Skilling
ØThe longer you are unemployed, the more “de-skilled” you become as workplace skills are not developed
ØThis leads to diminishing ‘human capital’ over time
¥Reduced chances of finding work
ØThe longer you are unemployed, the less likely you are to find a job

Question 8

what are the measures of unemployment

Answer 8

Measures of unemployment - the claimant count and the international labour orgnastation ILO and the uk labour force.

Question 9

what are the causes of unemployment

Answer 9

) The causes of unemployment:
structural unemployment
frictional unemployment
seasonal unemployment
demand deficiency and cyclical unemployment
real wage inflexibility

Question 10

what is the formula for unemployment

Answer 10

Unemployed x 100 = rate of unemployment

Labour force

Question 11

what is unemployment defientiuon

Answer 11

“The number of

people looking for work but who cannot find a job at a point in time.”

Question 12

what is underemployment

Answer 12

Underemployment occurs when workers can not find a job that is suitable for their qualifications and experience or who cannot find enough hours to work

Question 13

what is frictionally unemployment

Answer 13

Unemployment that occurs as workers move between jobs, mainly through career moves or geographical changes

it is normally short term

Question 14

what is seasonal unemployment

Answer 14

This occurs when workers are unemployed at different times of the year

Question 15

what is the real wage inflexibility

Answer 15

Real wage inflexibility occurs when real wage rates are above the equilibrium wage rate

Question 16

what happens when the supply of labour to be greater than the demand for labour:

Answer 16

Workers will supply more of their services at higher wage rates
However, firms will demand less workers as the wage rate is too high

Question 17

what is the demand side of unemployment

Answer 17

1) If cyclical unemployment occurs, then this can be represented by a shift in AD to AD1.
2) This may also occur through seasonal or frictional factors.
3) As a consequence, unemployment of Y1-FE has now been created.
4) Notice that real national output has reduced to Y1 indicating a lower rate of economic growth.)
5) Notice also that the price level has reduced to P1, indicating a lower rate of inflation. Whilst this itself may be desirable, a government may need to weigh up the benefits of this versus the lower rate of economic growth and higher rate of unemployment

Question 18

what is the supply side of unemployment

Answer 18

1) If a firm experiences an increase in costs, perhaps as a result of higher wages, they may decide to reduce their supply
.2) Or, in response to cyclical unemployment, they may scale back production in order that they are not left with surplus stock that they cannot sell or may be expensive to hold.
3) This will shift supply from SRAS to SRAS1, and create unemployment of Y-Y1.
4) As a result, Real National Output has also fallen, and there has been an increase in the price level from P to P1 indicating inflation.

Question 19

what’s the difference between clamming count and labour force survey

Answer 19

Unemployment estimates are based on a person’s self–classification as being ‘out of work, but ‘currently and actively seeking to work’ in the Labour Force Survey (LFS), while the claimant count is a count of the number of people who claim unemployment related benefits