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Economics AS (Macroeconomics) > Unemployment > Flashcards

Unemployment Flashcards

1
Q

Define unemployment?

A

Where an individual does not have a job and is willing and able to work.

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2
Q

what are the two ways of measuring unemplyoment?

A
  • The claimant count

- The Labour Force Survey

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3
Q

What is the claimant count?

A

It is the number of people who receive unemployment benefits

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4
Q

What is the problem with the Claimant Count?

A

The claimant count underestimates the number of unemployed because:

  • Not all unemployed qualify for JSA
  • Not all unemployed claim JSA
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5
Q

What is the Labour Force Survey?

A

It takes a sample of 60,000 households and provides a total unemployment figure

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6
Q

What is criteria for being unemployed according to the Labour Force Survey?

A
  • You don’t have a job
  • You have been looking for a job for at least 4 weeks
  • If you get a job you could start within at least 2 weeks.
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7
Q

What are some effects of unemployment on Households and Individuals?

A

No income:

  • no way of paying debt
  • Have to rely on others
  • potential loss of home
  • Unemployment can lead to health problems like depression and alcoholism.
  • Lack of self-respect and identity
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8
Q

What are some effects of unemployment on The economy?

A
  • Less ouput, less money in circulation (affects the government objective)
  • Lower demand
  • Fewer wage rises
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9
Q

What are some effects of unemployment on the government?

A
  • Rise in benefit spending (opportunity cost)

- Fall in government revenue

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10
Q

What are some effects of unemployment on communities?

A
  • Loss of facilities and amenities

- rise in crime

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11
Q

What are some effects of unemployment on firms?

A
  • Less pressure on pay rises
  • (depending on product) fall in trade
  • recruitment is easier
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12
Q

Define unemployment rate?

A

the number of people unemployed as a percentage of the number of people who are economically active

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13
Q

What are problems with the Labour Force Survey?

A

The labour force survey is very time-consuming and expensive measure compared to the claimant count

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14
Q

Define cyclical or demand-deficient unemployment?

A

unemployment caused by a lack of aggregate demand in the economy in accordance with changes in the economic cycle

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15
Q

Who is seen as economically inactive?

A
  • full time students
  • homemakers
  • the ill, disabled, unqualified
  • not in employment, education or training
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16
Q

What are the conditions for employment under the Labour Force Survey

A
  • you don’t have a job
  • you have been looking for a job for at least 4 weeks
  • if you get a job, you could start work in at least 2 weeks
17
Q

What are some basic causes of unemployment?

A
  • firm goes bust
  • mechanisation
  • lower wages in other countries
  • mismatch of population/jobs in specific areas
  • weak economy
18
Q

What are some more detailed causes of unemployment?

A
  • Demand-deficient or cyclical unemployment
  • Structural unemployment
  • Disequilibrium unemployment
  • Frictional unemployment
  • technological unemployment
19
Q

Explain demand-deficient or cyclical unemployment?

A
  • A fall in output, so less demand for labour.

- Aggregate demand falls, so not as much labour is needed

20
Q

Define structural unemployment?

A

Unemployment caused by changes into he pattern of global supply and demand that mean that labour in a particular industry is no longer required

21
Q

Define Frictional unemployment?

A

Short-term unemployment that occurs when workers are between jobs

22
Q

Define technological unemployment?

A

Unemployment caused by capital replacing labour in a particular industry or occupation

23
Q

Define disequilibrium unemployment?

A

A situation where wages rise without any changes in supply or demand

24
Q

What can disequilibrium unemployment be caused by?

A
  • Industrial action (forcing wages up)

- A rise in minimum wage

25
Q

Explain disequilibrium unemployment?

A
  • If wages go up then demand for employment will fall.
  • However the supply for employment will rise and this extra group of people, now willing and able to work will not be employed.
  • The diagram says that if wages go up, then unemployment will also go up.
26
Q

HOWEVER… problem with disequilibrium unemployment?

A
  • It is a two dimensional diagram that is telling us that unemployment is only to do with increase or decrease in wages
  • There are other factors which affects unemployment like demand for goods and services.
  • The diagram, in practice, is useless
27
Q

What does economic analysis of causes of losing a job, not care about?

A

Losing a job through:

  • incompetence
  • laziness
  • bad behaviour
28
Q

What is hysteresis?

A
  • A prolonged period of unemployment may reduce future employability.
  • They may lose skills
  • They get into a habit of being unemployed

Economics AS (Macroeconomics) (13 decks)

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