Unemployment Flashcards
Define unemployment
Situation where a person does not have a job but is actively seeking work
Define unemployment rate
Percentage of the working population who do not have a job but are actively seeking work
Formula for participation rate
Workforce/population of working age
X 100
Describe the LFS work
ONS interviews 60,000 households per quarter (about employment status)
Defines unemployment as those who are able, want to and available to work at current wage rate but do not have a job
Describe how the Claimant Count measure unemployment
Counts unemployed as those claiming JSA
Does not include anyone under 18, on part time jobs, looking for work but cannot claim JSA
Define frictional unemployment
Workers who lose their jobs but quickly find new ones
Define structural unemployment
Unemployment caused by a mismatch between the skills that workers in the economy can offer and the skills demanded of workers by employers
Define cyclical/demand deficient unemployment
Unemployment changes over time corresponding to the economy cycle
Define real wage unemployment
When real wages are stuck at a level above that needed to reduce unemployment any further
Define voluntary unemployment
People who register as unemployed but do not want to work at the currency real wage rate
Define natural rate of unemployment
Percentage of the labour force who are unable or unwilling to work at the current market wage rate
What are the limitations of the LFS
Hidden unemployment —> people who are classed as unemployed are actually unfit to work
Fraud claims —> people claim they’re unemployed to claim benefits and are working illegally in the black economy
60,000 interviews —> unrepresentative of the whole population —> too high or low
4 weeks or less —> doesn’t include these so unemployment is underestimated
