Macro 2.3 Employment Flashcards
Define unemployment
Those of working age who are willing and able to work actively seeking jobs but do not have a job
How is unemployment rate calculated
Unemployed/economically active
X 100
What is the claimant count
Total people claiming benefits
Why is the claimant not accurate 3
Difficult to compare to countries that don’t have benefits
Not all unemployed claim
Subject to fraud
Why can LFS be inaccurate
Sampling errors
Cost
Discouraged workers will drop out of the work force
Underemployed
What is cyclical unemployment
Demand deficient during reaction due to lack of AD
How can cyclical unemployment be shown on a diagram and explain
AD shifting left on a LRAS
AD decreased due to lowered consumption
Is supply’s demand decreases firms will look to cut COP resulting in sacking workers
If AD increases in the future firms will rehire
What is real wage unemployment
When wages are forced above equilibrium in a labour market creating excess supply
What are the two types of disequilibrium unemployment
Cyclical and real wage
3 examples of equilibrium unemployment
Structural
Frictional
Seasonal
What are the two subsections within structural unemployment
Occupational -mismatched skills
Geographical- aren’t able to move
4 reasons for the natural rate of unemployment (NRU)
Generous benefits system
Excessive labour market regulations
Lack of infrastructure or transportation
Lack of work training
Costs of unemployment
Lost output
Government finance deteriorations
Social costs (riots ect)
Lost income (decrease standard of living)
Hysteresis
2 potential benefits of unemployment
Greater pool of worker to choose
Low inflation
