Unemployment Flashcards
What defines being in employment?
People aged 16 or over who are doing paid working for firms or other organisations, or self-employed
What defines being economically inactive?
People or working age who are not looking for work, for a variety of reasons such as students, retirement, or illness
What are discouraged workers?
People who have been unable to find employment and who are no longer looking for work
They are part of those who are economically inactive
What is the difference between economically inactive and unemployed?
Economically inactive includes all those people of working age who do not have a job and are not looking for a job
The unemployed are those who are in the workforce seeking jobs, but who are without jobs
What is the number of employed an indicator of?
The number of those employed is an important indicator to the production process in their role as a factor of production (labour)
Why is full employment a core macroeconomic policy objective?
Having large numbers of people without jobs means that the economy is not making the best use of its labour resources and is sacrificing potential output that could be produced
Why will there always be people unemployment?
Frictional and Seasonal Unemployment
Why is it not desirable to have the economy operating close to full capacity?
If the economy were to be operating very close to full capacity, this would be likely to put upward pressure on wages and thus prices. There would be conflict between achieving full employment and maintaining the stability of prices
What does full employment really mean?
Full employment does not mean that unemployment will be zero but at a higher percentage
How was unemployment measured before?
The measure of employment was the claimant count of unemployment by measuring the numebr of people registered as unemployed and claiming unemployment benefit (Jobseeker’s Allowance) (JSA)
How does someone claim JSA?
People claiming JSA must declare that they are out of work, available for, and actively seeking work, during the week in which their claim is made
What is a problem for using the claimant count to measure unemployment?
People claiming JSA may include people who are claiming benefit but not actually prepared to work
It also excludes people who would like to work and looking but not eligible for unemployment benefit
People feel shame for being unemployed
What is the current measure of unemployment?
ILO unemployment rate is a measure based on the Labour Force Survey. This identifies the number of people available for work, and seeking work, but without a job.
How does the ILO unemployment rate define an unemployed person?
Without a job, want a job, have actively sought work in the last four weeks and are available to start work in the next two weeks
Out of work, have found a job and are waiting to start in the next two weeks
What are the disadvantages of the ILO unemployment data?
They are sample evidence, and extrapolated up to give the picture for the UK as a whole. The sample cannot be guaranteed to be fully representative
Moreover, people feel ashamed for being unemployed and so do not want to declare themselves so
Why is measuring a developing countries unemployment even more difficult?
No social secuirty system means unemployed workers have no incentive to register as being unemployed
People cannot find jobs they are qualified for and take second-choice jobs: this is underemployment
What is underemployment?
People who are unable to work as many hours as they want or are overqualified for their jobs
What is the formula for unemployment rate?
Unemployed///Economically Active
