Unemployment

Question 1

What is the labour force?

Answer 1

People over 15, employed for at least 1hr per week, unemployed ppl looking for jobs
13.3 Million

Question 2

What is the labour force affected by?

Answer 2

• Population
• Level of net migration
• Age distribution
• Partcipation rate

Question 3

What is the Participation Rate and how is it measured?

Answer 3

The percentage of the working age population who are in the labour force
Percentage of labour force/working age population
65.5%

Question 4

What are the types of unemployment?

Answer 4

CYCLICAL UNEMPLOYMENT: Caused by a contraction in economic activity or AD, rose during GFC
STRUCTURAL UNEMPLOYMENT: Occurs from structural changes within economy caused by changes in tech, pattern in G+S and microeconomic reform. E.G: PMV, mining
FRICTIONAL UNEMPLOYMENT: Temporarily unemployed as they change or find jobs, can be worsened by imperfect flow of info between job seekers and those looking to hire.
SEASONAL UNEMPLOYMENT: Is part of frictional, but specific to jobs which are characterised by seasonal work
HIDDEN UNEMPLOYMENT: Ppl who are unemployed but not reflected in the official ABS stats
UNDEREMPLOYMENT: Ppl who work for less than full-time hrs per week but would like to work longer hrs. Not classed as unemployed as they are working for more than an hr/week. 8.2% of workforce in 2018
LONG TERM UNEMPLOYMENT: Unemployed for more than 12 months, usually from structural. 23% of unemployed

Question 5

What is the NAIRU (Non-Accelrating Inflation Rate of Unemployment)

Answer 5

• Where there is no Cyclical Unemployment. Prior to GFC, during Mining Boom Nairu was 5%, UE fell below Nairu adding to inflation.
• U/E < NAIRU: Inflation increases
• U/E = NAIRU: Inflation stays the same
• U/E > NAIRU: Inflation decreases: Higher wages, Higher cost for firms, Higher consumption
• U/E > NAIRU: Increase in EG will create jobs and reduce Cyclical U/E, Additional EG will lead to an increase in AD and not AS and Higher wages, causing inflation

Question 6

What are the factors causing unemployment?

Answer 6

• Deficiency in AD
• Contractionary macroeconomic policy
• Constraints on EG
• Rising PR
• Structural Change
• Technological Change
• Productivity
• Inadequate levels of training and investment
• Labour costs
• Labour market inflexibility

Question 7

What are the negative economic consequences unemployment?

Answer 7

• Opportunity cost of lost output and income
  As the economy’s resources are not being used to their full capacity, real GDP is lower than what it could potentially be and national income is reduced and frim achieve fewer profits, lowering investment
• Lower living standards
• Loss of human capital (Hysteresis)
  -Costs to the government
• Lower wage growth

Question 8

What are the negative social consequences of unemployment?

Answer 8

• Income Inequality
• Personal and Social Problems
• Unemployment for particular groups

Question 9

Which groups are more likely to face unemployment?

Answer 9

• Youth: 15-19 18%
• Indigenous Australians: 11.6% higher than non
• Older workers
• Specific regions
• People born outside of Aus