Unemployment

Question 1

Definition

Answer 1

An unemployed worker is defined as one who is out of work, but purposively looking for work,and available for work

Work is defined as work for money , students and housewives work but are not unemployed

Question 2

Unemployment rate

Answer 2

Unemployment rate= number unemployed/total labour force

Question 3

Measuring unemployment

Answer 3

Claimant unemployment- the number of people in receipt or unemployment related benefits

Alternative measures
Labour force surveys
Employment/population ratio

Question 4

Flows into and out of unemployment

Answer 4

From jobs:
People made redundant/ sacked
People resigning
People temporarily laid off

From outside the labour force:
School/college leavers
People returning to to the labour force

To unemployed

To jobs :
People taking new jobs
People laid off returning back

To outside labour force :
People who give up looking for jobs 
People who reach retirement age 
People who temporarily withdraw  from labour force 
People who emigrate/die

Question 5

Labour market

Answer 5

Job seekers+ employers = labour market

Question 6

Equilibrium unemployment

Answer 6

Frictional (search)

Structural-
changing pattern of demand
Technological unemployment
Regional unemployment

Seasonal unemployment

Question 7

Disequilibrium unemployment

Answer 7

Happens when markets are prevented from clearing

• sticky wages

Question 8

Recession on employment

Answer 8

Starts off Normal

Demand for labour decreases creating demand deficient unemployment

Lowering wages and number of workers (flexible wages)

Or sticky wages will create demand deficient unemployment and disequilibrium unemployment and keep wages the same but see a larger reduction in employment