Unemployment Flashcards
Define Unemployment
Unemployment refers to the state of being without a job, actively seeking employment, willing to work and can work.
What is the ONS
ONS - (office of national statistics), publishes reports and figures on UK unemployment.
What is the ILO
The ILO unemployment rate is a broader measure that conforms to international standards set by the International Labour Organisation.
It includes people who are out of work, available for work, and actively seeking employment.
What is the claimant count
The Claimant Count is a measure of unemployment based on the number of people claiming unemployment-related benefits, such as Jobseeker’s Allowance (JSA) or Universal Credit. (always available b4 ILO)
Define Jobseekers Allowance
Job Seekers allowance - a benefit for people who are not in full-time employment (work less than 16 hours per week), are capable of working and are looking for work.
Why is the Claimant Count Lower than the ILO
Because not all unemployed are eligible for job seekers allowance or not over 18.
What are the measurements of unemployment
Claimant Count
ILO unemployment
What are the economic Costs of unemployment
Economic costs – Lost output of goods and services, causes a waste of scarce economic resources and reduces long run growth potential in the economy
What are the costs of unemployment
Fiscal costs to the government – Has an impact on government expenditure, taxation and the level of government borrowing each year. Higher unemployment means higher benefit payments and lower tax revenues.
De-skilled Workers – Individuals who are unemployed for a long period of time may loss their skills as a result of rapid changing markets, meaning a lower chance of the unemployed becoming employed again
What are the social costs of unemployment
Social Costs of Unemployment - There is some relationship between A rise in unemployment and a rise in crime. Also Unemployment causes Stress which is linked to mental health issues.
Define Labour Force
People with a job or registered as actively looking for work
What is the labour force participation rate
The labour Force Participation Rate – Equals the percentage of the population of working age who are in the labour force
What are the economic consequences of unemployment
Increased spending on unemployment benefits and other income
Fall in revenue from income tax and taxes on consumer spending
Lost Output (GDP), economy operating within the potential production frontier
Increase in inequality of income and wealth, rise in relative poverty.
When is the labour market at equalibrium
Firstly, the labour market is in equilibrium where demand for labour is equal to the supply of labour.
When does unemployment occur in the labour market (diagram)
Unemployment occurs due to the labour market moving away from the equilibrium or measured unemployment when the labour market is at equilibrium.
When the market moves away from equilibrium there is potential for excess supply of labour.
Define involuntary unemployment
Involuntary Unemployment - Individuals who are willing and able to work at the prevailing wage rates are unable to find employment.
Define Cyclical Unemployment
a type of unemployment that is caused by fluctuations in the business cycle or economic cycle
Define Voluntary unemployment
When people choose not to work even though it is available
Define Classical Unemployment
Classical unemployment – occurs when real wages, or the cost of employing a worker, are too high
Define Frictional Unemployment
Frictional Unemployment – Workers who are temporarily unemployed such as moving from school to work that time between or want better wages and looks for a better job
Define Seasonal Unemployment
Seasonal Unemployment - When a worker is unemployed due to their niche market being not seasonably demanded and chooses not to get another job
Define Structural Unemployment
Structural Unemployment - When there is a change in the business and the jobs are not needed such as technological advancements, or a decline in the industry, overall when there is a structural change in the economy (more long-term)
Define the Natural Rate of unemployment
The natural rate of unemployment is the rate of unemployment when the labour market is in equilibrium.
Consists of structural, frictional and seasonal unemployment
Why do we use demand side policies to help unemployment
Demand side policies- Overall these policies aim to increase aggregate demand to keep jobs in demand and to reduce demand deficient unemployment.
List Supply side policies which help against unemployment
Overall these policies reduce structural unemployment (natural rate of unemployment.
Education and training
Geographical subsidies - help workers and firms move
Employment Subsidies - incentive to keep long term employees
What do Classical Economists believe will occur when there is a wage change
That there is an instantaneous adjustment to the labour market as people will realise that they need to take lower wage jobs as of the news and historic trends.
What do Keynesian Economists believe will occur when there is a wage change
That it will take several months even years for the labour market to clear due to sticky wages.
Define the labour force survey
This is a survey asking 60,000 people whether they were unemployed and whether they were looking for a job.
