Employment and unemployment Flashcards
what is claimant count?
number of people officially claiming unemployment- related benefits- must actively seeking work
what is labour force survey?
all those actively seeking and available for work, whether or not they are claiming benefit
what is long-term unemployed?
people unemployed for at least one year
what is labour force?
the number of people of working age who are able, available and willing to work
what is full employment?
when there’s enough infilled job vacancies for all the unemployed to take work
what are discouraged workers?
people out of work for a long time who may give up on job search and effectively leave the labour market
what does economically inactive mean?
those who are of working age but neither in work nor actively seeking paid work
what is employment rate?
the percentage of the population of working age in full-time or part-time paid work
what is the unemployment rate?
percentage of the economically active population who are unemployed
what is the natural rate of unemployment?
the rate of unemployment when the labour market is in equilibrium. it is unemployment caused by structural factors such as frictional unemployment and structural unemployment.
what is frictional unemployment?
unemployment that is usually short-term and occurs when a worker switches between jobs.
- a job vacancy exists
- a friction in the labour market prevents the unemployed from filling the vacancy
- number of unfilled job vacancies can be used as a measure of the level of frictional unemployment
what is structural unemployment?
occurs when the demand for labour is less than the supply of labour in an individual labour market
long-term unemployment results from the structural decline of industries due to what?
- inability to complete or adapt to new demand of products
- emergence of more efficient competitors in other countries
- changing skill requirements
what are some barriers to successfully getting new jobs?
- new jobs may require specific skills and extra qualification
- jobs might need additional training can be costly
- high cost of/availability of childcare + commuting
- unaffordable housing
- many jobs are relatively low-paid jobs and offer insecure incomes
what does geographical immobility of labour mean?
refers to barriers that prevent people moving from one area to another to find work.
- difficult to shift workers from profession to profession
- family, social ties
- financial costs of moving house
- migration controls
what does occupational immobility of labour mean?
inability to switch between different occupations, affected by level of transferable skills and educational requirements for jobs. often limited skills that are not very transferable
when does cyclical unemployment occur?
when there is a negative output gap, linked to economic cycle. indicates that demand is low
is cyclical unemployment permanent?
it is temporary and self-correcting provided that markets are sufficiently competitive and prices and wages are both flexible
what is seasonal unemployment?
occurs when workers are laid off on a short-term basis at certain times of the year
e. g.
- tourism
- agriculture
- catering
- building
what is real wage?
the purchasing power of the money/nominal wage. real wage falls when inflation is higher than the rise in nominal wage rate
what is real wage unemployment?
unemployment caused by real wages being stuck above the equilibrium real-wage
what does money wage rigidity consist of?
- money illusion- workers will resist any move for cut in money wages though they might accept fall in real wages bought about by a rise in prices of commodities
- wage fixation through contracts- little possibility of changing money wages
- minimum wage laws- intervention by government in fixing minimum wages below which employers are not permitted to pay wages to the workers
- efficiency wages- employers are not interested in lowering wages as high wages make workers more efficient and productive
benefits of falling unemployment:
- increased employment, boosts real GDP, helps to lift living standards, demand
- more people in work, creates tax revenue for government to lower the deficit or increase spending
- social costs of unemployment are severe, so cutting it has huge social and economic benefits
disadvantages of falling unemployment:
- extra spending from expanding labour market might worsen the current account
- risk of an acceleration in demand-pull and cost-push inflationary pressures
- fewer spare labour will mean a rise in unfilled vacancies
causes of high youth unemployment:
- skills gaps- may not be willing to employ people who cant read and write
- reluctant employers- may prefer older, more experienced workers
- falling retirement rates- caused by declining pension incomes so less jobs for young people
- weak macro fundamentals- i.e. low real GDP growth and low business confidence
policies to increase labour demand:
- macro stimulus policies- low interest rates and policies to increase business lending, depreciation in exchange rate, infrastructure investment projects
- cutting cost of employing workers, reductions in national insurance contributions, financial support for apprenticeship programmes
- competitiveness policies- reductions in corporation tax, tax incentives for research/innovation spending, enterprise policies to lift rate of new business start-ups
policies to increase labour supply:
- reducing occupational mobility- better funding for training, teaching new skills, expansion of apprenticeship/internship programmes
- improving geographical mobility- rise in house building keep property prices lower + encourage affordable rents, active regional policy to create new jobs and business
- stimulate stronger work incentives- higher minimum wage or living wage, reductions in income tax/national insurance, welfare reforms to reduce risk of poverty trap
