Unemployment

Question 1

Unemployment definition

Answer 1

Everyone who is willing and able to work but cannot find a job

Question 2

Labour force

Answer 2

All the people of working age who are willing and able to work - employed and unemployed people

Question 3

UK Government objective (Unemployment)

Answer 3

Low unemployment 4.5% in august 2021

- Approximately 2 million people who get welfare benefits

Question 4

Measuring unemployment

Answer 4

Labour force survey (LFS)

Question 5

L. f. survey around how many households?

How regularly?

Answer 5

40,000 Households

Each month

Question 6

Claimant count

Answer 6

This counts the number of people who are claiming unemployment benefits (job seeker allowance JSA, now universal credit)

Question 7

Causes for unemployment

Tip there are four causes

Answer 7

1. Structural unemployment
2. Cyclical unemployment
3. Seasonal unemployment
   4, Frictional unemployment

Question 8

Structural unemployment example

Answer 8

Inexperienced

Question 9

Cyclical unemployment

Answer 9

Unemployed consumption can’t pay wages

Question 10

Seasonal unemployment

Answer 10

Ski season

Question 11

Frictional unemployment

Answer 11

Gardeners leave

Question 12

Government’s aim cyclical unemployment

Answer 12

To decrease cyclical unemployment the government should aim to increase AD

Question 13

Government’s aim structural unemployment

Answer 13

To decrease structural unemployment the government should increase education and training

Question 14

Government’s aim frictional unemployment

Answer 14

The government does not worry too much

Question 15

Consequences of unemployment for unemployed people

Answer 15

1. No disponible income so they have a lower SOL
2. Stress/mental health : Lower quality of life and lose motivation
3. Difficulty saving for a pension, long term implications

Question 16

Consequences of unemployment for Government

Answer 16

1. Lower GDP which could lead to a recession
2. Loss of tax revenue which worsens budget
3. Less pressure on inflation

Question 17

Significance of unemployment

It depends on …

Answer 17

The current rate/level of unemployment
Cause/Type of unemployment
How long they have been unemployed
Benefits
Distribution of unemployment - geographically, age group

Question 18

Voluntary unemployment

Answer 18

People do not have a job because they are unwilling or unable to accept the current jobs or wage offer. This is structural, seasonal and frictional unemployment

Question 19

Involuntary unemployment

Answer 19

A person is willing or able to work but cannot find a job. This is cyclical unemployment

Question 20

Natural rate of unemployment

Answer 20

This exists when AD = AS i. e. market clears

Question 21

Natural rate of unemployment equation

Answer 21

Natural level of unemployment/Labour force * 100