types of uneployment Flashcards
how many types do you need to know
5
what are the 5 types of unemployment
seasonal
frictional
cyclical
strucural
realwage
what is cyclical unemploymeng
unemployment casued by insufficient AD in eocnomy
in terms of cyclical unemp a lack of ad in econ means
less d for firms to hire labour as derived demand for g/s
if rowht is low there is a lower demand for
labour
how do we show cyclical unemployment on a grpah
AD shifts left so level of growth from y1 - y2
if spending on output is low workers producing output are
no longer required and unemployment will rise
cyclical employment aka
demand deficient unemployment or keynesian unemployment
cyclical unemploymet closley linked to
negative ouput gaps
what does cyclical unmploymet being linked closely to -ve output gaps mean
if actual econ growth is below trend rate
the level of demand in the econ wont be high enough to ensure all workers looking for jobs can find employment
even if growth is positive but low what may rise
cylical unemployment
what is structural uneploymen t
results from mismatches between supply available and the labour demand for differently skilled labour
structural unemployment i due to long term chanfes in the
labour market
structural unemployment is due to long term changes in teh labour market which mean
certain industries declining whilst others growing
in terms of structural unemployment - workers vecoming unemployed from one industry may be unable to
switch to another industry due to not having adeqaute skills for new rising industries
what are the 3 things structural unemployment is associated with
occupational immobility
geographical immobility
long term trends in industyr growth and decline
what is occupational immobility
workers dont got skills or qualifications nwwsws meaninf they cant ransfer jobs or move on to a new profession and find work
cause skills they have not needed or they dont have the skilss - lost em or theyve become obsolete
what is geogrpahical immobility
when workers cannot or not willing to move
how can advances in tech cause structural unemployment
workers replaced by automated produciton
what is it called when advances in tech cause strucutral unemployment casue workers repaced by automated production
technological unemployment
what is regional unemployment and what is it linked to
people unwilling to move from one area to another
failure of regions to attract new businesses
linked to geographical immobility
structural unemployment can be affected by
globla factots
what are the global factors tructural unemployment can be affected by
emergini industrial naitons e.g china and india producec goods more cheaply than UK
so foreign goods more price comp
leads to declien in employment in UK manufacturing industries
likely wokers from these industries remain unemploeyd unless can fill vacanicies in other industries in whihc hte UK got comp advantage
what is fricitonal unemp
uneployment due to workers moving between jobs
timee takne to search fro new job = friciotnal unemp
frictioanl unemp is usually what kind of term
short terms
frictional uneployment cna be longer if
3 marks
lack of info
insuffficient retraining opportnties
welfare benefits ‘too generous’ to prodive incentive to take jobs sooner
how do we reduces friciotnal unep
imporvemts in helping peopl find out locally and nationally what jbo vacacies exist
create stronger incentives for peopel to accept avaialble jobs
ficitonal unemp aka
search unemployment
what is ral wage unemp
when wages are foxed above equilibrium wagge rate in labour mkt causing excess sipply of labour
in terms of real wage unemployment a hihg min wage may mean what
workers who are looking for jobs cannot find employment as ther is a lower quantity of labour demanded ag t hat wage
real wage unemploymet aka
classical unemployment
what graph do we draw to show real wage unemp
real wage - y axis
quaniity of employment 0 x axis
laobur supply labour demand
w2 kine
excess supply and demand highlighted byb real wage unemp
we can also say real wage unemploymenet occurs becasue
failure eof labour market to clear
what is seasonal unemployment
unemployment due to job depending on season e.g summetime fruit picker
what are the 2 ther types of unemployment
voluntary and involuntary unemployment
what is voluntary unemployment
people unwilling to acept job at going wage rate despite tehr being jobs avaiablr
what is involuntary unemployment
people are unable to find employment at the current market wage rare
in voluntary uneployment what unemployment may count in this category
friciotnal unemployment
why might fricitonal uneployment count in volunatry uneployment
if worker remians unemployed longer due to welfare benefits providing suppor
but this could be seen as a subjective measure
what is the natural rate of unemplloyment
rate of unemployment that consists of all volunary, structural and frictional unemployment
when may natural rate of unemploymnt increase
if preplacemnt ratio tpp high
what is the replacement ratio
disposable income out of work/disposable income in work
a replacemtn ratio of close to 1 or above means
prspm cam earn in beenfits at least as much as hey could do in employment
a ratio of 1 reduce incentive to
work
reducing replacemtn ratio below 1 should reduce incentive to
reamin frictionally unemployrd
what are the 4 frictional (or voluntary factors that can reduce inventive to remain frictionally uneplotmed
- less gen beenfits for unemployed
- slower minimum wage increases
- introduction of tax credits
- lower income tax or a higher tax free alownace
how can tax credits reduc eeinevtive to remain ‘frictionally unemployed’
allows people in lower paid jobs to keep some of their beenfits
(structural factors) regional unempoyment exists when
unemployed people unwilling or possibly unableto move to where job vacanices are i.e eo imonoile
structural factors) what could regional unemp be due to
lack of knowledge of job vacies in otherr cities
barreos to moving e..g high house prices
move impractical due to famo ties
structural factros ) the harder it is to relocate
the higher the regional unemployment
strucutral factors ) unemployed worekrs may lack
appropritat eskills for jobs vancies that exist
structural factors - give xamples of unemployed woekrs lacking the appropriat eskills for vacancies that exost
deline of heavy industries e.g mininng
created lareg number of unemploued who unable to simply move into jobs created in rising industrues such as ICT
structura factors) how cna we solve problems of workers lacking appropritate skills for job vacancies
better trainig of unemployed workers
the natural rate of unemploymetn exists even if
AD is hihg - cuclical unemployment largely eliminated
policies to reduce natural rate of unemp are connected with
reforms to supply side of the economy
unemploylemt can beb categoriesd according to whether caused by
demand side
supply side factors
explain how unemployment can be caused by demand side factors
cycical unemp caused by demand side factors .e AD
Explai how unemployment can be caused bu supply side fcators
friciotnal and structural unemployment caused by productive potential of the econ
connected with the econs log term aggregate supply
therfore casued by SS factorf
in order to minimise uneployment its likely government swill use a
combo of policies relating to AD and AS
Full employment , natural rate of unemploymetn and wehere ther is no cyclical unemployment are used
interchangably
what i snother way of htinking of atural rat of unmep
unemployment exisitng when eoc on the LR AS currv or verticla portion of AS curve
if unemployment exist when econ on LR verticla portion of AS curve any attempt to reduce unemployment htrough demand side policies will
increase inflation
if unemploymen exists on vertical portion of keynesioan AS curve how can we reduce unemployment durther and safely
supply side policies
what are the 8 conseuences of unemp
risk of poverty for nem
health issues (mentla and phsycial) for unep
crime levesl may rise whn it rises (but link not always clear )
lower TR for gov due to fewer people working + decrease in speing
increased gov spending on welfare benefits for unemployed
deskilling of workforcce
wasted resources
less pressure on wages to rise - why?
explain how a consequence of unemployment os a deskilling of workfore
longer youre unemployed, harder it is to rejoin workforce - known as hysterisis
if resources are waasted in terms of unemp it means eocn cant operate on its
PPC
LESS PRESSURE ON WAGES TO RISE MEANS
POSSIBLY LOWERING COST PUSH INFLAITON
typical mistakes - full unemplyoment dont mean
0 unemployment
typical mistake - jiist bcuase unemployment exists what can’t we assume and hwy
no jobs
early 2020 800k jobs avaialbe
typical mistakes why cna imporvemtns in tech not be blamed for rises in unemployment
it destroys some jobs but creates more jobs than it destroys
