Employment and unemployment 2.1.3

Question 1

Employment

Answer 1

this can be measured as a level or as a percentage. this tend to be linked to economic growth as a fast economic growth will lead to more jobs being created

Question 2

Unemployment

Answer 2

This is a term referring to individuals who are employable and ae actively seeking a job but is unable to find a job.

Question 3

how to measure unemployment

Answer 3

Claimant Account:
This is the number of people receiving benefits for being unemployed and it records people who are successfully claiming jobseekers allowance

Labour Forces Survey:
A survey which asks you if you are unemployed and actively seeking work

Question 4

limitation of Claimant Account

Answer 4

claimant account excludes lots of people
- people over pension age
-people under 18
- people in full time education
- married women lookin into work

Question 5

calculate rate of unemployment

Answer 5

unemployed/Labour force * 100

Question 6

limitation of Labour Force Survey

Answer 6

it could be subject to sampling errors and may not be representative

Difficult to decide whether somebody is sick or actively seeking work

Question 7

underemployment

Answer 7

is when people have a part time or a zero hour contract when they would prefer to be full time. it also includes people who are in jobs which don’t reflect their skills level.

Question 8

when does underemployment tend to occur

Answer 8

it tends to occur during an increase recession because firms will just reduce staffs hours instead of making the redundant and having to pay for expensive radiancies package. this will lead to low income. less disposable income and less therefore less spending. Ultimately leading to a reduction in the AD.

Question 9

what does high inactivity lead to

Answer 9

this will lead to the size of the labour force decreasing causing a fall in the productive potential of the country. Decreasing GDP and decreasing Tax revenue as less people ae working.

Question 10

low inactivity lead to

Answer 10

this can result in more people being unemployed if there are no jobs available

Question 11

frictional unemployment

Answer 11

where people are moving out of jobs
- this could be due to new workers entering the labour market or people have chosen to leave their previous jobs. these people will take a while o relocate and gain a job they are willing to accept
- however this isn’t a serous problem as its only short term.

Question 12

Structural unemployment

Answer 12

where industries are in decline an the workers skills are out of date.
-this is a much more serious type of unemployment as its long term decline in an industry leading to a reduction in employment. this could be because of increasing international competition or technology. it where the demand for labour is lower than the supply. such as ship building.

Question 13

what are the 2 types of structural unemployment

Answer 13

Regional: Certain areas of a country suffer from very ow level of employment due to industry closure
Sectoral: It is where one sector (primary, secondary, tertiary) suffers from a dramatic fall in employment

Question 14

seasonal unemployment

Answer 14

where people are out of work for some period of the time of the year
-some employment is strongly seasonal in demand. Duh as tourism. once that time of the yea has passed, then the labour force is drastically reduced. there is little done to prevent this from happening in the free market economy.

Question 15

cyclical unemployment

Answer 15

lack of spending causing demand deficiency in the economy
-This unemployment is due to a general lack of demand of goods and services within the country. Also known as demand deficient.
-When there is a recession in the economy, the the rate of unemployment is increased because of business failures and an increase in workers layoff and redundancies. This due to a decrease in demand causing business to cut employment in order to control costs.

Question 16

Classical or Real wage unemployment

Answer 16

problems with the supply side policy
- this is due to the real wage being above the equilibrium level, leading to excess supply of labour. some workers might be prepared to to work for less than the minimum wage and the companies may be prepared to take on more workers if they could pay less than the minimum wage but that its illegal.

Question 17

significance of Migration

Answer 17

• leads to an increase in jobs. since the 1990s, the UK has seen a larger increase in immigration from mainly the eastern European countries
• due to the circular flow of income, immigrants tend to create jobs and total employment increases.
• however this leads to lower wages, particularly for lower paid low skilled jobs. UK firms recruit workers meaning the supply of labour increases and so the the price of the equilibrium is reduced.

Question 18

significance of skills in employment

Answer 18

• now higher skills are needed to work. to maintain its employment levels it needs to increase the skills of the labour workforce. Structural unemployment is caused by the lack of skills or the wrong skills. such as engineering companies struggle to recruit skilled workers even though there are unemployed workers in the local area.
• if firms will train their staff, the government has to step in to correct the market failure, but this is costly. this will lead to people becoming more unemployed as their skills don’t fit the jobs offer.
• Migrants will come and fill those shortages if their skills fit.

Question 19

impact of unemployment on: Workers

Answer 19

• those who have been unemployes will have a loss of income, which will leas to less disposable income which will lead to a decone intheir living standard
• the long term unemployed will ding it harder to find jobs as they will lose there skills overtime
• those who are in jobs will suffer from lower job security and will fear being made redundant. They could also see a fall in wages because the firm can easily replace them if they complain about pay.

Question 20

impact of unemployment on: Firms

Answer 20

• There will be a decrease in demand for goods. a decrease in their profit
• long term unemployment can cause people to lose their skills overtime, making it harder for firms to employ skilled people, do firms have a smaller pool of skilled workers.
• They can offer low wages as people will take the jobs anyways because they know there is a lack of jobs as hey have a few options

Question 21

impact of unemployment on: Consumers

Answer 21

• less disposable income so they spend less, leading to the demand going down
  -However to tackle this, firms will put their goods on sales to increase their demand for their product.

Question 22

impact of unemployment on: Government

Answer 22

• Reduces income will lead to less tax revenue and an increase in Government spending on welfare benefits for families that are out of work. incurring n opportunity costs as the money will be spent elsewhere.
• This will increase their budget deficit. tis will cause the government to raise taxation or scale back for public spending on public and merit goods. Such as the NHS or education. increase in borrowing.

Question 23

impact of unemployment on: LRAS

Answer 23

• It results in a potential national output and represents an inefficient use of scarce resources. if people chose to leave the labour market permanently, then this will have a negative effect on LRAS. therefore damaging the economic growth potential so the country is unable to achieve their desired PPF.