Macroeconomics 2.3 Unemployment Flashcards
What is unemployment?
Unemployment refers to individuals who are without a job, want a job, and have actively sought work in the last four weeks.
Who are the economically inactive?
Economically inactive individuals are those who are not participating in the labor force and are not actively seeking employment.
What is the workforce?
The workforce comprises all individuals who are available for work, including both employed and unemployed individuals.
Who are discouraged workers?
Discouraged workers are individuals who have stopped looking for work because they believe no jobs are available for them.
What is the Claimant Count?
The Claimant Count is a measure of unemployment based on the number of people claiming universal credit and jobseeker’s allowance.
What is the Labour Force Survey?
The Labour Force Survey is an official survey conducted by the ONS that assesses household participation in the labor market.
What are the ILO criteria for unemployment?
The ILO criteria include: *Without a job *Want a job *Have actively sought work in the last four weeks *Able to start work within the next two weeks.
What is frictional unemployment?
Frictional unemployment occurs when individuals are temporarily unemployed while transitioning between jobs.
What is structural unemployment?
Structural unemployment is a long-lasting type of unemployment caused by fundamental shifts in the economy.
What is cyclical unemployment?
Cyclical unemployment arises due to a negative output gap linked to a recession, reducing the demand for labor.
What is demand deficient unemployment?
Demand deficient unemployment occurs when there is insufficient aggregate demand in the economy.
What is seasonal unemployment?
Seasonal unemployment happens when demand for labor fluctuates with the seasons.
What is wage inflexibility?
Wage inflexibility occurs when real wages are set above the equilibrium wage, preventing adjustments in the labour market.
What is voluntary unemployment?
Voluntary unemployment occurs when individuals choose not to work because the benefits of not working outweigh the benefits of working.
What is meant by the replacement ratio?
The replacement ratio compares the income received from benefits to the income from working, influencing voluntary unemployment.
What is full employment?
Full employment is a situation where all economically active individuals willing to work at prevailing wage rates can find employment.
What are the main causes of unemployment?
The main causes include: *Frictional *Structural *Cyclical *Demand deficient *Seasonal *Wage inflexibility *Voluntary.
What is the perceived natural rate of unemployment in the UK?
The perceived natural rate of unemployment in the UK is between 4 and 6%.
What policies could reduce frictional unemployment?
Policies include: *Improving job matching services *Providing better information on job vacancies *Enhancing training programs.
What policies could address structural unemployment?
Policies include: *Investment in education and training *Support for industries in decline *Encouraging geographical mobility.
What policies could correct cyclical unemployment?
Policies include: *Fiscal stimulus *Monetary policy adjustments *Incentives for businesses to hire.
What is classical or real wage unemployment?
Classical unemployment occurs when real wages are set above the market-clearing level, leading to excess labor supply.
What can contribute to classical unemployment?
Factors include: *Trade unions *Minimum wage laws *Wage councils.
