Employment And Unemployment

Question 1

What are the 3 economic categories of employment?

Answer 1

-Employed
-Unemployed
-Economically inactive

Question 2

Define employment

Answer 2

The state of being paid to work for a company

Question 3

Define unemployment

Answer 3

The state of being out of work while being willing and able to work

Question 4

What is long term unemployment?

Answer 4

It accounts for people who have been out of a job for at least one year

Question 5

What is the formula for unemployment rate?

Answer 5

(Number or people unemployed / labour force) x 100

Question 6

What is cyclical unemployment?

Answer 6

It is caused by a decrease in AD, reducing the demand for labour
Cyclical unemployment can rise quickly in a recession, can increase in a period of slow growth

Question 7

What is frictional unemployment?

Answer 7

It is caused by workers seeking a better job or who are in-between jobs

Question 8

Why is there always frictional unemployment

Answer 8

Due to the fact that people will always be looking for work, not everyone will be employed

Question 9

Who does frictional unemployment affect?

Answer 9

• It affects those people who are new entrants to the labour market such as school and university graduates
• it affects people who rely on short-term contracts and move between employers more frequently.

Question 10

How can frictional unemployment be reduced?

Answer 10

• Making information on jobs more widely available
• Making job search and applications more easy and affordable

Question 11

What is structural unemployment?

Answer 11

Mainly caused by lack of suitable skills for the jobs available
Structural unemployment can happen because of other other barriers to people finding work

Question 12

What is the unemployment trap?

Answer 12

Situation in which there is little financial incentive for someone who is unemployed to start working because the combined loss of benefits and paying taxes may lead to them being worse off

Question 13

How are structural unemployment and the unemployment trap related

Answer 13

People often remain unemployed because of the unemployment trap

Question 14

Define economically inactive

Answer 14

Those who are of working age but who are not in/not seeking work

Question 15

What are the main reasons for economic inactivity?

Answer 15

1. Students being in education
2. Being terminally sick
3. Retired people
4. Discouraged workers
5. Being a carer for someone at home

Question 16

What are discouraged workers?

Answer 16

People who have failed to find work and have given up looking

Question 17

What is underemployment?

Answer 17

Those who are under utilised in a job below their skill set

Question 18

What is the effect of underemployment?

Answer 18

Under employment tends to make the official unemployment figure look better than it is

Question 19

What are the two measures of unemployment?

Answer 19

-The labour force survey (LFS) by the international labour organisation (ILO)
-Claimant count measure

Question 20

What is the Labour Force Survey?

Answer 20

The LFS identifies the number of people available for work, and seeking work,, but without a job
It is generated from a survey of 60-70,000 households

Question 21

Advantages of the LFS

Answer 21

Allows for comparison between countries as it is used internationally

Question 22

Disadvantages of the LFS

Answer 22

• Sampling errors as the sample is so Iarge
• Costly and time consuming
• Only carried out quarterly so may not pick up changes in the labour market quickly

Question 23

What happens when the LRAS curve in a cyclical unemployment diagram is not at equilibrium?

Answer 23

There is cyclical unemployment. The economy is in a recession

Question 24

How can the LRAS curve not being at equilibrium be resolved

Answer 24

Increase in AD will restore full employment