Unemployment Flashcards
Two methods of measuring unemployment
Claimant count measures the number of people seeking job seekers allowance.
Labour force survey of 40,000 households a month seeking info on peoples circumstances and labour market status.
Full employment
When there are enough unfilled job vacancies for all the unemployed to take work.
Voluntary unemployment
A situation where unemployed choose not to work at the current wage rate.
Reasons for voluntary unemployment
- High marginal tax rates
- Suitability to skills / qualifications
- Generous unemployment benefits
Involuntary unemployment.
A situation where the unemployed are willing to work at the market wage but are prevented by factors beyond their control.
eg. Trade unions & efficiency wage theory.
Main types of unemployment
Seasonal unemployment
Structural unemployment
Frictional unemployment - changing jobs
Cyclical unemployment - persistent weakness in AD
Structural unemployment
When demand for labour falls below supply for labour in the economy, causing a mismatch in skills.
Demand deficient unemployment
Derived from economic slowdown and less demand in the economy.
Two types of labour immobility
Occupational immobility - barriers to FOP’s moving between sectors
Geographical immobility
Supply side factors affecting unemployment (MICEE)
Minimum Wage
Immigration
Costs of training staff
Employment laws - labour market regulations
Education / training - improves occupational immobility
Real wage unemployment
When wages are set above equilibrium level causing the supply of labour to be higher than the demand.
Demand side factors affecting unemployment
- High marginal tax rates
- Suitability to skills / qualifications
- Generous unemployment benefits
