Unemployment Flashcards
High Unemployment means:
- less production
- slower economic growth
- lower tax revenue
- more socil welfare payments
- long term social costs
Long Term Social Costs examples:
- inequality
- crime
- poverty
Labour force Participation Rate:
Labour force/ working age population
Who is in the Labour Force/ Workforce:
Above 15 and working or actively seeking work.
How many hours of work minimum per week to be considered in the Workforce?
1hr/week
Who is excluded from the Labour Force?
- Under 15
- not actively seeking work
- full time student or domestic duties
What is unemployment?
People out of work and still actively looking for work. Includes:
- regularly checking and applying for job offers and any action taken to show such effort.
Unemployment rate equation:
unemployed/total labour force
Who surveys the labour force?
ABS (Australian Bureau of Statistics)
How often does ABS survey of labour force?
monthly.
Types of unemployment
- structural
- cyclical
- frictional
- seasonal
- hidden
- under-employment
- hardcore unemployment
What is Structural unemployment?
When due to a structual shift in the economy, there is a mismatch of skills between workers and the industry. Can be technology driven.
Cyclical Unemployment?
Natrual economic downturns causing falling aggergate demand for g+s, leading to less production + layoffs, + less job opportunities.
Frictional unemployment?
Temporary unemployment between jobs/job - school.
It is ineveitable + depends on job matching efficency and job flexibility.
Seasonal Unemployment?
Unemployment at regular annual times (mall santas/students graduation)
Hidden Unemployment?
Can be considered unemployedbut don’t fit definition of ABS unemployment.
Discouraged + stopped actively seeking a job BUT would take offer if given.
Under-employment?
People who are working (under full time) but want more work.
Long term unemployment?
Unemployment more than 12 months.
Hard to correct as being unemployed for too long causes complications.
Complications of long term unemployment?
- unattractive to employers
- structural unemployment will affect them as their skills are not continuously developed
- loss of confidence
Hardcore Unemployment
people out of work for so long they are considered “unemployable”
includes: mental illness/disability/drug abuse/crime
What does NAIRU stand for?
Non Accelerating Inflation Rate of Unemployment
What is the Non Accelerating Inflation Rate of Unemployment?
The level of unemployment where there is no cyclical unemployment.
Theory behind NAIRU?
The level of unemployment must be balanced some levels of unemployment is normal. Too much employment will also be bad for the economy.
Unemployment above NAIRU means:
There is spare capacity in the labour market and we are not utilising labour efficiently.
