Unemployment

Question 1

Working age population

Answer 1

16-64

Question 2

Define active population (workforce)

Answer 2

people of working age who are able to work, actively seeking work or actively working

Question 3

Define inactive population

Answer 3

people of working age who aren’t able to work or aren’t actively seeking work

Question 4

Define unemployment

Answer 4

able to work and actively seeking work, but not working

Question 5

Unemployment rate formula

Answer 5

unemployment level / active population x 100

Question 6

Employment rate formula

Answer 6

number of employed people / total working age population x 100

Question 7

Formula for activity/participation rate

Answer 7

active population / working age population x 100

Question 8

In what circumstances may the unemployment level increase but the employment level stays the same?

Answer 8

• increase in immigration
• economically inactive people started looking for work

Question 9

ILO Labour Force Survey

Answer 9

• survey 80,000 households
• ask if anyone out of work for 4 weeks and ready to start in 2 weeks
• ^^ surveyed every quater

Question 10

Claimant Count

Answer 10

• how many people are claiming benefits

Question 11

Limitations of ILO’s Labour Force Survey

Answer 11

• 27 million households in UK, not 80,000
  ^^ not necessarily accurate estimate

Question 12

Limitations of Claimant Count

Answer 12

• not everyone who is unemployed will claim benefits
  ^^ - stigma around claiming benefits
  ^^ - not allowed if partner is high earner
• underestimates unemployment

Question 13

Define underemployment

Answer 13

-when workers are employed but may want more hours or are underusing their skills

Question 14

Real wage/classical unemployment

Answer 14

• wages above equilibrium, creating excess supply of labour
  ^^ could be due to NMW or trade unions

Question 15

Cyclical unemployment

Answer 15

• not enough demand in economy, firms produce less, decreased derived demand for labour
  ^^ 2008 recession
  (unemployment on graph between the two Ys)

Question 16

Structural unemployment

Answer 16

• when the structure of the economy changes and jobs move elsewhere
  (UK 1980s moving from manual labour to service sector)
  ^^ due to occupational/geographical immobility

Question 17

Define occupational immobility and how the government fix this

Answer 17

• when workers can’t move between different jobs because they lack the skills needed
  FIX:
• education, training, apprenticeships

Question 18

Define geographical immobility and how the government fix this

Answer 18

• when workers struggle to move between different areas due to family ties, expense and time
  FIX:
• infrastructure (HS2), relocation subsidies

Question 19

Define frictional and seasonal unemployment

Answer 19

• frictional - when people are temporarily unemployed whilst searching for a new job
• seasonal - unemployment due to their job being seasonal (only needed at specific times of year)