Section 8 (measuring: Economic growth, inflation, unemployment, the balance of payments, developments Flashcards
What is the meaning of unemployed?
The meaning of unemployed is people who are able, available and willing to work but can not find jobs despite active search for work.
What are the two ways of measuring unemployment?
Claimant count measure
Labour force survey by the international labour organisation.
What is the claimant Count measure?
It is a way of measuring unemployment through measuring how many people are claiming benefits such as the Job seeking allowance.
They have to declare that they are able and available to work and are actively searching for work.
What are the problems with the Claimant count measure
- Some people maybe be falsely claiming benefits (claim they are available to work but are not)- Fraud
- Some may be discouraged after being dropped from the labour market
- Some may be reluctant to claim benefits
What is the labour force survey
The Labour Force Survey (LFS) is a regular survey sent to a sample of the uk that collects information about people’s work, unemployment, and other economic activities. It helps measure the number of people working, looking for work, or not in the workforce.
What are the problems with the Labour force survey?
- Can be exposed to sampling error because that sample may not be able to represent the whole of the uk. Some groups may feel unrepresented such as migrants
- the Survey only asks if you are employed or not but struggle to capture underemployment (this is where workers skills are not being used fully, low paying jobs, not enough hours)
What are the strengths of the Uk unemployment data.
-Large sample size(40,000+ people)
-Local and regional data helps
-New timely up to date figures in each month
What are the weaknesses of the uk unemployment data
-High levels of underemployment which can be hard to capture because of LFS
- Sampling error can happen
What are the Causes of unemployment
Seasonal unemployment
frictional unemployment
cyclical unemployment
structural unemployment
What is seasonal unemployment?
Seasonal unemployment occurs when people are out of work because their jobs are only needed during certain times of the year. For example:
• Farmworkers may be unemployed outside the harvest season.
• Tourism staff may lose work during off-peak months.
It happens because the demand for labor changes with the season.
What is frictional unemployment?
Frictional unemployment happens when people are temporarily out of work while transitioning between jobs.
For example:
• A recent graduate looking for their first job.
• Someone leaving one job to find a better one
What is cyclical unemployment?
This is where a component of Ad falls which lead to Ad falling leading to less output and a new Macroeconomic equilibrium which then workers are not needed anymore so they lay off them.
Draw cyclical unemployment graph
AD going back with new macroeconomic equilibrium including GPL1 and GPL2 and Y1 and Y2 (output)
What is structural unemployment and the causes?
Structural unemployment occurs when there is a mismatch between the skills that workers have and the skills needed for available jobs. It can happen because of changes in the economy, such as:
• New technologies making certain jobs obsolete (e.g., factory jobs replaced by automation).
• Occupational immobility refers to the difficulty workers face when trying to move from one type of job to another due to a lack of the necessary skills or qualifications.
• Geographical factors, where jobs are available in one area, but workers are in another area.
What are the consequences of unemployment?
What are the consequences of unemployment?
Consumer households wealth decreases-less disposable income-less consumption- standard of living (dependent on benefits)decreases.
Government spending increases- give out more social welfare benefits and reduce tax(automatic stabiliser to reduce fall in AD)
Firm production decreases due to less demand for production and revenue/profit reduces. Bargaining power of workers can also increase because there are fewer people looking for jobs which leads to a potential pay rise.
