Macroeconomics- Unemployment Flashcards
What is unemployment?
-Those who are willing and able to work at current market rates but are without a job
-When the supply of labour is greater than the demand for labour
What is meant by full employment?
When demand for labour equals supply of labour
However this does not mean unemployment does not exist as frictional and structural unemployment will always exist
What type of demand is demand for labour?
Derived demand- The demand for labour comes from demand for goods and services
What are the unemployment statistics for quarter 4 of 2023?
3.8% unemployment
(1.32 million people)
21.9% of the working population are economically inactive
(9.28 million people)
What is the labour force survey?
-surveys a sample of households
-Asks if people who aren’t working are seeking work
-To be classed as unemployed a person must be able to work within 2 weeks and have looked for a job in the past 4 weeks
What is the claimant count?
The number of people claiming unemployment related benefits
Does not take into account unemployed people who do not claim benefits
What is frictional unemployment?
-Also called transitional unemployment
-the time spent between jobs by people leaving one job for another
-frictional unemployment will be made longer term by recession, welfare payments, lack of information about jobs that are available and occupational and geographical immobility
What is structural unemployment?
Caused by a decline in an industry (e.g coal)
Can also be caused by technological changes
If workers are occupationally or geographically immobile they are structurally unemployed
What is cyclical unemployment?
-Also called demand deficient unemployment
- Usually occurs when the economy is in recession
When AD is low unemployment rises as Labour is a derived demand from the demand for goods and services
A country suffering from negative output gaps is likely to have cyclical unemployment.
What is seasonal unemployment?
-Unemployment caused when demand for labour fluctuates throughout the year
-regular and predictable
What is real wage unemployment?
-The idea that if wages are high then more workers are willing to supply their labour creating excess labour and unemployment
-There is little evidence to suggest that real wage unemployment actually happens
What is the natural rate of unemployment and what is underemployment?
Natural rate of unemployment:
-frictional unemployment + structural unemployment
-The rate of unemployment when demand for labour = supply of labour
Underemployment:
-When a person does not work full time or their job does not reflect their actual training and skills
What is voluntary and involuntary unemployment?
Voluntary- When workers choose to remain unemployed and refuse job offers at current market wage rates
Involuntary- Occurs when workers are willing to work at current market wage rates but there are no jobs available
