Introduction to Unemployment Flashcards
What is unemployment?
Unemployment refers to people of working age who are actively looking for a job, but are not employed
What is underemployment?
Refers to people of working age with part-time jobs when they would rather work full time; also refers to those who are not making full use of their skills
Why is unemployment an issue?
It means that an economy is wasting scarce resources by not fully using them
What is the labour force?
number of people who are employed + number of people not employed
- labour force excludes those who cannot or do not want to work
What is the unemployment rate?
(number of unemployed/labour force) * 100
How do official statistics underestimate true unemployment? (3 points)
- Excludes “discouraged workers” - those who quit looking for a job
- Does not consider the concept of underemployment
- Do not include those who are on retraining programmes
How do official statistics overestimate unemployment?
Figures do not include people working in the underground economy
What is a limitation of unemployment statistics?
Does not account for difference in unemployment among different population groups
What are the 2 types of consequences of unemployment?
- Economic consequences
2. Personal & Social consequences
What are the 7 economic consequences of unemployment?
- Loss of real output
- Loss of income results in decrease in AD
- Loss of tax revenue
- Costs to government to fund unemployment benefits
- Economic costs of dealing with social problems
- Exacerbates inequality of income distribution
- Could result in high unemployment rates in the future as well, due to “hysteresis” (lacking skill)
What are the personal and social consequences of unemployment?
- Personal problems
- loss of income, increased indebtedness, loss of self-esteem - Greater social problems
- violence, crime, drug use
- transformation of societies
