unemployment Flashcards
what is the claimant count
the number of people claiming job seekers allowance each month
what is the ILO (International Labour Organisation)’s unemployment rate
the percentage of the WORKFORCE who are without jobs, but available for work, willing to work and looking for work.
how is the data for the ILO’s unemployment rate collected
the labour force survey
what is the ILO’s definition of unemployment
those who are of working age who are out of work, want to work, have actively sought work in the last 4 weeks and are able to start work in the next 2 weeks
why is using the claimant count as a measure of unemployment inaccurate
not all unemployed people are on jobseekers allowance, some are on universal credit, some people believe they will find a job quickly so dont go on jobseekers allowance, some people have savings so cannot claim benefits.
why is using ilo unemployment better than claimant count
because ilo unemployment picks up those who are unemployed byt do not claim jobseekers allowance
what happens to gap between ilo unemployment and claimant count in a recession
shrinks are less people are confident they will find a job soon so claim benefits
what happens to the gap between ilo unemployment and claimant count in a boom
grows as more people are confident they will quickly get a job so dont bother claiming benefits
what is full employment
a core macroeconomic policy objective in which people who are economically ctive in the workforce and are willing and able to work at the current wage rate can find a job
cyclical/demand deficient unemployment
arises due to lack of aggregate demand for goods and services. this is because labour is a derived demand which comes from the demand for goods and services. if the economy is growing them firms will be confident in rising demand for their goods and services so will employ more people
what is structural unemployment
unemployment caused by the decline in a particular industry or occupations due to changed in demand and supply
what is regional unemployment
structural unemployment which is concentrated in a particular area
what is technological unemployment
employment which arises from workers losing their jobs to technology
what is frictional unemployment
when workers are between jobs. some dont take the first job offered to them as they want a better job. includes recently graduated university students.
what is seasonal unemployment
when some occupations find themselves unemployed due to seasonal demand. e.g fruit picking and tour guides.
what is real wage inflexibility
when wages are inflexible and remain above the equilibrium level causing the supply of labour to be greater than demand. wages are sticky downwards said keynes.
what is a gig economy
an economy made up of lots of people having multiple part time jobs instead of one full time job. this doesn’t offer security but does offer flexibility
costs of unemployment
lost output
lost tax revenue
government spending on unemployment benefits
pressure on other forms of government spending
costs to the unemployed
lost output as a consequence of unemployment
having people who are willing to work without jobs is a waste of resources. standard of living is lower than it needs to be.
lost tax revenue as a consequence of unemployment,
less incomes so less income tax. less revenue so less corporation tax. therefore less public service quality or quantity.
government spending on unemployment benefits as a consequence of unemployment
more transfer payments needed for the unemployed, so higher taxes needed for those who are working
costs to the unemployed
poor health, family break ups, victims of stigma
what is voluntary unemployment
a situation arising when an individual chooses not to accept a job at the going wage rate
involuntary unemployment
a situation when an individual who would accept a job at the going wage rate is unable to find a job
it depends upon for full employment
can we measure employment accurately
is there hidden capacity due to under employment
full employment definition
all available factors of production are being used in the most efficient way possible. aka everyone who wants a job and will accept one at the going wage rate can find work. no output gap or demand deficient unemployment.
hysteresis effect
fall in factors of production in quality or quantity. the longer people are unemployed for the less skills they retain so quality of labour decreases. in a long term recession capital quality falls as machines become outdated.
negatives of full employment
vulnerable to demand pull inflation causing a boom.
can we accurately measure if an economy is operating at full employment?
no. employment figures hide under employment which is not maximising the labour force.
what is under employment
in a job but want more hours or in a job but want a more skilled role.
what is relative poverty
less than 60% of mean income
what is absolute poverty
income doesnt meet basic needs
unemployment rate equation
number of unemployed people/labour force
why do wages increase in a positive output gap
firms have to increase wages to attract the unemployed
there is often high inflation so workers ask for pay rises in line with inflation
why is it harder to measure unemployment in developing countries
informal economy so cash transfers or bartering used which aren’t recorded
lack of data keeping due to administrative costs
no welfare state so no claimant count
