lesson 13- unemployment Flashcards
what is unemployment
people willing and able to work, but don’t
what is full employment
everyone is employed in an economy
what is the labour force survey (LFS)
measures unemployment (age 16-65)
-samples
=4.3%
what is the claimant count
number of people claiming jobseekers allowance/ universal credit
=1.8 million
what is the economic inactivity rate
people not working and not looking for a job
=21.8%
-havent been seeking work within the last 4 weeks and cant work within the next 2 weeks
what are the limitations of unemployment status
-only a sample
-once a month
-time lag
-discouraged workers who have given up aren’t counted
-inaccuracy of claimant count
-age not considered
-many people not included e.g. hidden economy
as economy grows, unemployment ____. on a ___ delay as firms wait for consistent/reliable growth. Unemployment may stay ____ as economy grows due to skilled labour and tech
falls
time
high
what are the benefits of full employment
-GDP/growth
-more demand due to disposable income
-consumer and firm confidence
-more taxes
-fewer benefits (gov)
-ability to export
-people gaining skills due to training in work
why does regional unemployment happen
-lack of resources
-lack of growth
-lack of government intervention
-lack of population
-lack of infrastructure
(transport)
-lack of confidence
-lack of business
investment
-lack of skills
negatives of unemployment
-can cause fall in GDP
-negative multiplier effect
-resources not utilised full
-benefits payed (gov)
-less tax revenue
-poverty
-social issues e.g. crime
what are the positives of unemployment
-inflation decreases as AD decreases
-consumers not paying taxes and gaining benefits can increase consumption
-spare capacity increases flexibility
-frictional unemployment -ease of labour mobility
what is hidden unemployment
someone with high qualifications, but works at a low level job
what is voluntary unemployment
people choosing not to work, may be due to having enough money or a benefits system, refuse job offers.
-economically inactive
what is seasonal unemployment
people not being unemployed at certain times of the year, e.g. ski instructor in summer
what is frictional unemployment
short term (>4 weeks)
-people moving between jobs
what is structural unemployment
long term changes in a economies structure, e.g. industrial decline, de industrialisation
what is technological unemployment
capital taking the place of labour, automation meaning people lose their jobs, e.g. robots
what is cyclical unemployment
a fall in GDP (AD) following the business cycle of economic growth
-aka demand deficient
what is real wage/ classical unemployment
-draw
wages are inflexible downwards-they are stuck too high above the level needed to reduce unemployment
-die to minimum wage legislations, trade unions etc
-unemployed workers may be prepared to work for less
-employers may be prepared to take on more workers at a lower rate, but cant
https://www.google.com/imgres?q=what%20is%20real%20wage%2F%20classical%20unemployment&imgurl=https%3A%2F%2Fwww.learn-economics.co.uk%2FGraphs%2FClassical-Unemployment.svg&imgrefurl=https%3A%2F%2Fwww.learn-economics.co.uk%2FClassical-unemployment.html&docid=HvxA7imdyXK__M&tbnid=5aTwMCoqkVCv7M&vet=12ahUKEwjOkaDb2feKAxX2RkEAHUfNKHYQM3oECBoQAA..i&w=800&h=711&hcb=2&ved=2ahUKEwjOkaDb2feKAxX2RkEAHUfNKHYQM3oECBoQAA
-demand for labour is lower than supply of labour as minimum wage is above the wage at equilibrium
-therefore full employment cant be obtained
what is the natural rate of unemployment
rate of unemployment when the labour market is in equilibrium
-due to the idea that people will always be unemployed
=difference between those who would like a job at the current wage rate and those who are willing and able to take a job
-shows frictional and structural unemployment
what happens when there is more employment
businesses have a greater pool of applicants, so less upward pressure on wages
-potential loss of skills in new recruits
-governments gain income tax revenue
-governments pay less unemployment benefits
