(Un)Employment Flashcards
Advantages of the Labour Force survey method
-Same methodology is used in many countries allowing inter-country comparisons
- little change in criteria over time allowing time-series comparisons
Disadvantages of the Labour Force survey method
- sampling errors
- costly and time consuming
- quarterly so may not pick up changes in the labour market quickly
Advantages of the claimant count measure
- exact number of people claiming benefit calculated so accurate in that sense and inexpensive
- easy to see regional/ local differences
- data produced monthly
Disadvantages of the claimant count measure
- many unemployed do not meet criteria for benefits
- some do not claim so part of the problem of hidden unemployment
Under employment
People looking for longer hours or under-utilised in terms of ability or qualifications or experience and can make official unemployment figure look better than it is
Cyclical/ demand deficient/ keynesian unemployment
weak AD causes contraction in national output so redundancies
-demand for labour derived from demand for goods and services
Frictional unemployment
Workers seeking better job or in between job
always some in labour market regardless of economic cycle
reduced by making information on jobs more widely available and job search more affordable
Structural unemployment/ occupational immobility
Mainly caused by lack of suitable skills for available jobs as a result of de-industrialisation or other structural changes
-reduced by funding for training and apprenticeship/ internship programs
Geographical immobility
Unable to move to find work perhaps because transport systems are poor or because of house price and living cost differentials
- reduce by improving transport infrastructure and building more houses to keep property prices lower or encouraging more affordable rent
Unemployment trap
Little financial incentive to start working because combined loss of welfare benefits and income tax and other Direct taxes would be worse
childcare costs can also be barrier
Seasonal unemployment
Fluctuations and output and sales related to the season of the year EG Christmas time
Natural rate of unemployment
Rate of unemployment when there is full employment: frictional and structural
Classical unemployment/ real wage inflexibility
Wages do not easily adjust to reach a new equilibrium:
- trade unions with their collective bargaining push them above the free market EQ
- minimum wages in theory set above the free market EQ
- monopsony employers (single of a particular type of labour e g NHS and nurses) → Employment and wages lower than free market EQ
