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economics year 11 - semester 2 > Unemployment 6 (J) done > Flashcards

Unemployment 6 (J) done Flashcards

1
Q

unemployment defintion

A

Must be in the labour force (over 15, actively looking for work, capable of working in the immediate future) and have been in paid work for less than 1 hour in the survey week

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2
Q

unemployment rate definition

A

percentage of people in the labour force who are without jobs and actively seeking jobs

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3
Q

unemployment rate formula

A

number of unemployed
___________________________________ X 100
civilian labour force under 15

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4
Q

participation rate definiton

A

the percentage of people of working age (15+) who are in the labour force

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5
Q

participation rate formula

A

labour force
_______________________________________________ X 100
no. of people working age population (15-65)

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6
Q

hardcore ue:

A

caused by peoples inability or unwillingness to work

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7
Q

underemployment:

A

someone who is currently employed, but would like to work and is available to work additional hours

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8
Q

real wage unemployment

A

wage levels higher than the market clearing price of labour. eg, minimum wage rate set above marketed equilibrium (cost push inflation link)

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9
Q

3 types of unemployment

A
  1. frictional
  2. structural
  3. cyclical
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10
Q

frictional unemployment

A

caused by normal search time required by workers with marketable skills who are changing jobs, entering or reentering the labour force. Sometimes called search unemployment. occurs in a boom

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11
Q

type of ue that is usually short term

A

frictional

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12
Q

type of ue that is usually long term

A

structural

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13
Q

structural unemployment caused by:

A

a mismatch between jobs and workers skills. results from changes in the economy overtime (eg, tastes, patterns of demand, technology)

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14
Q

happens no matter where you are on the business cycle

A

structural ue and frictional ue

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15
Q

structural ue causes (no examples):

A
  • inappropriate education or job related skills
  • changes in demand over time
  • changes in production technology
  • competition from other markets
  • geographical differences
  • supply shocks
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16
Q

changes in demand over time eg:

A

petrol to electric vehicles

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17
Q

changes in production technology eg:

A

AI, robotics

18
Q

competition from other markets eg:

A

reduction in tarrifs

19
Q

geographical differences eg:

A

offshore production

20
Q

supply shocks eg:

A

global pandemic, wars

21
Q

structural ue model

A

LRAS/ SRAS
long run aggregate supply / short run aggregate supply

22
Q

structural ue model explanation

A

Cessation of production causes LRAS1 to shift to LRAS2. Permanent shift in Yfe1 to Yfe2 reduces the productive capacity of the economy. Leads to long term ue which may be regional and raises ue to a Yfe.

23
Q

long term unemployment definition

A

the number of people unemployed for 52 weeks

24
Q

cyclical unemployment

A

aka demand deficient ue
linked to the business cycle, arises in the downswing and recession phases. occurs when growth in no. of seeking jobs > growth in no. of jobs available.

25
Q

causes of cyclical ue

A

lower demand for products due to lack of consumer confidences, less spending due to less disposable income

26
Q

_____ ue rates rise rapidly but often slow to fall again

A

cyclical

27
Q

cyclical ue explanation

A

demand has fallen for the product and the price level has decreased. This caused the firms to cut back on their workforce so less people are hired.

28
Q

jobs susceptible to cyclical ue

A
  • manufacturing
  • retail sales
  • motor vehicles
  • construction / building
29
Q

non monetary effects of ue

A
  • self image problems (long term especially)
  • burden of groups in the labour force (youth)
  • family breakups, health problems, mental illness, crime, political unrest
30
Q

costs of ue

A
  • GDP gap (loss of potential output that could have been produced by ue)
  • loss of human capital (labour, innovation, ideas)
  • retraining costs (eg $300,000 free fee paying VET placements)
  • ue benefit payments are net drain on federal budget
  • loss of tax revenue
31
Q

2 types of effects of ue

A
  1. output effects on income and output
  2. distribution effects on certain groups in society
32
Q

output effects

A
  • lost output involved is the cost in terms of welfare, lower income and therefore living standards
  • AD is reduced and hence rate of economic growth
  • shortage of skilled labour may lead to wage inflation due to lack of supply over demand for suitably qualified employees
33
Q

distribution effects

A
  • ue impacts more severely on certain groups: low level of skill and education, 15-19 yo, middle aged, minority, ethic groups {widens gap from rich to poor}
  • social effects: increased crime rates, divorce, suicide, drug abuse
34
Q

cutting ue - labour demand side policies (cyclical)
- micro stimulus policies and multiplier effects

A
  • low interest rates (C) and policies to increase business lending (I)
  • depreciation in the exchange rate (helps exports)
  • infrastructure investment projects (fiscal policy)
35
Q

cutting ue - labour demand side policies (cyclical)

A
  • cutting the cost of employment workers (financial support for apprenticeship programs)
  • competitive policies (reduction in corporation tax (to increase investment)
36
Q

cutting ue - labour demand side policies (cyclical) model explanation

A

rising AD causes expansion of SRAS helping to close a negative output gap

37
Q

cutting ue - labour supply side policies (structural)

A
  • reducing occupational mobility (better funding for and more more effective training/education to develop more skills
  • improving geographical mobility (rise in house building, more affordable rents) (achieve regional policy to create new jobs)
38
Q

low ue = ____ inflation

A

high

39
Q

high ue = ____ inflation

A

low

40
Q

falling inflation and rising unemployment joint model explanation (long)

A

incr interest rates, decr disposable income, decr demand for g/s, decr expenditure, decr output, decr demand for labour, incr cyclical ue, decr income, decr inflation, decr interest rates

economics year 11 - semester 2 (9 decks)

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