Employment & Unemployment Flashcards
Define employment level
Employment level- no. of people in work
Define employment rate
Employment rate- proportion of people working relative to the size of the workforce
Define workforce
Workforce- people of working age, willing & able to work … employed & unemployed
What are the 2 ways of measuring unemployment?
1) The claimant count
2) U.K. Labour force survey
What is the claimant count?
The claimant count- record’s no. of people claiming Jobseeker’s Allowance (JSA) or other benefits
What are the evaluation points for the claimant count?
👍- quick & cheap to obtain data
👎- ✖️ present full picture of unemployment- if unable to work or working in voluntary capacity for ⬆️ than 16 hours a week then ✖️ claim
ALSO- stigma attached to claiming benefits … ✖️ all eligible claim & some non-eligible (unemployed BUT ✖️ apply for JSA)
What is the U.K. labour force survey?
U.K. Labour Force Survey- measures ppl out of work in last 4 weeks & ready to start in next 2 weeks
Who is the labour survey used by?
Used by ILO (international labour organisation) & official measure in 🇬🇧 & EU countries
What does the labour force survey involve?
Involves face to face interview & then 📞 survey every quarter of 80,000 🏠holds- ask Q about members of 🏠hold out of work for 4 weeks & ready to start in 2
What are the evaluation points for the labour force survey?
👍- ⬆️ inclusive than claimant count as applies to anyone aged ⬆️ 16
👎- survey data 6 weeks out of date by publish time
What is underemployment?
Underemployment- worker employed BUT wants to work ⬆️ hours e.g. for ⬆️ 💵
What is unemployment?
Unemployment- someone willing & available to work BUT ✖️ employed
When has underemployment been prominent in real life?
⬆️ significantly after 2008 recession BUT unemployment figures misleading as shown to ⬇️- in reality job market experienced significant downfall as underemployment ⬆️
What factors effect employment?
1) School 🏫 /compulsory training leaving age (18)
2) No. of school 🏫 leavers entering higher/further 📚
3) Net migration- difference between immigration (into country) & emigration (out of country)
4) Taxes & Benefits
5) Availability of jobs
How does students choosing to go through higher education 📚 effect the job market?
👎 short term as initially workforce smaller- those in education 📚/training ✖️ economically active
👍 long term- 🏫 leavers ⬆️ employable- ⬆️ education & skills
How many students enter higher/further education and could this figure change in the future?
- ⬆️ 40% of 👨🎓👩🎓 continue with 📚 after 18 in 🇬🇧
- BUT likely to ⬇️ due to ⬆️ university fees (£9000 a year)
How does net migration (difference between immigration (into country) & emigration (out of country)) effect employment?
- ⬆️ both employment & unemployment
- 37% come to 🇬🇧 for 📚 & 34% for work
How do taxes & benefits affect employment?
- ⬆️ taxes on income discourage/disincentivise ppl to work
- ⬆️ benefits discourage/disincentivise ppl to work
How does the availability of jobs affect employment?
⬆️ employment if ⬆️ jobs available
What is inactivity?
Ppl of working age BUT unwilling/unable to work
What is a problem with inactivity figures?
Makes unemployment 👀 ⬇️ than reality because 👩🎓 👨🎓 👀 for work while studying, 👩 👀 for job to cover cost of 👶 care etc- ✖️ feature on unemployment figures- marked as inactive
Which groups of people are classed as inactive?
Includes:
- 👩🎓 👨🎓in full time further 📚
- Those looking after 👶 or other dependants
- Those with health issues
What is the classical view on the cause of unemployment?
Classical View:
- Unemployed because ppl unable OR ✖️ willing to work at going wage rate
- … unemployment solved if ppl accept ⬇️ wages- laissez fairs best approach- let market solve unemployment
- ⬇️ wages = ⬇️ cost for firms … firms prices can ⬇️ & profit margin maintained
- Real wage unemployment- wage kept artificially above market-clearing wage- … workers ✖️ accept lower wage & … ✖️ work due to ⬇️ wage BUT ✖️ realise that firm prices will ALSO ⬇️
- Believe out of work benefits ⬇️, trade unions ⬇️ & NO minimum wage-> unemployed forced to work
What is the Keynesian view on the cause of unemployment?
Keynesian View:
- Demand-deficient unemployment (cyclical unemployment)- caused by lack of AD e.g. recession
- ALSO ⬇️ spending & ⬆️ saving-> ⬇️ job opportunities as ⬇️ AD … firms employ ⬇️
- AND ⬇️ jobs = ⬇️ spending … VICIOUS CIRCLE ⭕️ continues
- Keynesian believe ⬇️ wages ✖️ = ⬆️ employment (classical view) as ⬇️ wages -> ⬇️ spending … ⬇️ ppl needed in employment by firms
What are the causes of demand deficient unemployment?
1) ⬆️ saving- SEE ABOVE
2) Lack of business confidence
3) ⬆️ value of currency- imports ⬇️ expensive … ⬆️ & exports ⬆️ expensive … ⬇️-> AD ⬇️
4) Slow productivity growth compared to their countries
5) External shocks e.g. ⬆️ oil⛽️ price-> ⬇️ spending as demand price inelastic (necessity) for⛽️
What are other causes/types of unemployment?
1) Structural unemployment
2) Frictional unemployment
3) Seasonal unemployment
What is structural unemployment?
Structural unemployment- workers ⬇️ jobs in declining industry as ✖️ have skills to join other industries
What is frictional unemployment?
Frictional unemployment- workers between jobs- moving jobs
What is seasonal unemployment?
Seasonal unemployment- workers who only have jobs- certain times of the year e.g. 🏄♂ 🌊 & 🎿 ❄️instructor
Define immigration
Immigration- ppl moving into country
Define emigration
Emigration- ppl moving out of country
Define net migration
Net migration- immigration ➖ emigration
What can immigration lead to?
1) ⬆️ employment if job vacancies filled
2) ⬆️ unemployment or ✖️ change if other ppl displaced from work or work ✖️ found
3) ⬆️ skilled workers are ⬆️ flexible if change in labour market requirements- ✖️ stay unemployed for long & move between jobs despite shocks- demand for these workers only fulfilled by them (rare skills)
What are the costs of unemployment on consumers?
⬇️ incomes & living standards ⬇️
⬇️ morale when out of work- repercussions for family members
What are the costs of unemployment on producers/firms?
⬇️ spending means firms ⬇️ lower prices & … make ⬇️ profit
BUT may mean ppl ⬆️ willing to stay in jobs as fear of unemployment- may work harder
What are the costs of unemployment on workers?
Workers skills might become out of date due to changes in work after unemployment
What are the costs of unemployment on government?
⬆️ unemployment means government pays ⬆️ jobseeker benefits & receive ⬇️ tax
What are the costs of unemployment on society?
Unemployed resources = opportunity cost- economy could produce ⬆️ without anything given up-> better standards of living
Potential ⬆️ crime 🔪
