Unemployment Flashcards
Define economically active
People of the working age who are willing and able to work and are currently seeking job or are working/employed
Define economically inactive
People of the working age who are not willing and able to work or aren’t seeking work
What is the working age
16-64
Name the 5 types of unemployment and their alternative names
1) Classical/Real wage
2) Cyclical/Demand deficient
3) Frictional
4) Structural
5) Seasonal
Describe cyclical unemployment
This is demand deficient unemployment. It occurs when there is a less demand of goods and services which means firms produce less, downsize and reduce their derived demand for labour, firms fire workers.
What is structural unemployment
This is when there is a change in the structure of the economy and the jobs shift from one sector to another
What is occupational immobility
This is when workers can’t move between different jobs because they lack the skills needed.
Ways in which government can intervene to reduce occupational immobility
1) Education
2) Training
3) Apprenticeship schemes
Ways in which government can intervene to reduce geographical immbolity.
1) Relocation subsidies
2) Transport improvements
Define hysteresis
Hysteresis occurs when a recession causes long-term effects which persists after the economy is moved out of recession
Formula for unemployment rate
Unemployment level/active population ×100
Formula for employment rate
Employment level/working age population × 100
What is activity/participation rate
What % of the working age population are actively seeking work or actively working.
Formula for participation rate
Active population/working age population × 100
What are the 2 ways of measuring unemployment
1) ILO (International labour organisation) Labour force survey
2) Claimant count
Explain the 1st way of measuring unemployment in detail
The first measure is the Labour force survey by ILO. 80,000 households are interviewed and then surveyed on the phone every quarter (3 weeks) to ask whether they are unemployed. In this survey, someone is considered as unemployed if they have been out of work for 4 weeks or more and are ready to start work within the next 2 weeks and are willing and able to and actively seeking work.
How does claimant count measures unemployment
Claimant count measures the number of people who are claiming unemployment benefits i.e. Job seeker’s allowance
Limitation of labour force survey by ILO
It interviews 80,000 households out of 27 million in the UK. Therefore, the sample used might not be representative of the whole of UK which means that this method lacks accuracy.
Limitation of claimant count
The claimant count does not include people who are unemployed but do not claim unemployment related benefits. This could be because of a stigma or their partner earning a high income. This means that it underestimates the actual level of unemployment
Which measure of unemployment does the UK government officially use
The ILO Labour Force Survey
