Unemployment

Question 1

what are the 3 categories that the ABS surveys and puts people in

Answer 1

1. employed - ppl who completed at least 1 hour of work or work unpaid in fam business
2. unemployed - ppl not employed during survey but activity seeking work and are willing/able to start
3. not in labour force - ppl > 15 yo who are neither UE or E like retirees, voluntarility, housewives

Question 2

what is parctipation rate - how has it changed for women and mean

Answer 2

proportion of working age population are who in work/seeking work

men: 78% 1980 71% 2019 (retire ealier)
women: 45% 1980 60.5% 2019 (social change)

Question 3

what is undermployment

Answer 3

proportion fo pat time workers who would like more work (disguied UE = spare capacity in workforce)

Question 4

what is undertilisation rate and what is it right now

Answer 4

addition of 2 measures of UE + UDE proving better pic of labour force 18.3%

Question 5

how do you calculate participation rate and what is the current particpation rate

Answer 5

labour force
—————— x 100 64.8%
pop >15

Question 6

how do you calculate UDE and what is the current UDE rate

Answer 6

(part time workers seeking work/labour force) x 100

11.4%

Question 7

how do you calculate UE and what is the current UE rate

Answer 7

labour force - employed…..(unemployed/labour force) x 100

6.9%

Question 8

what are the 2 broad categories of UE

Answer 8

voluntary - worker leaves job to find better one

involuntary - worker is laid off (low demand)

Question 9

what is frictional UE (current rate) and what are the 3 reasons it occurs

Answer 9

between jobs/search UE (1-2%)

1. lab mkt is imperfect (time/effort to find job)
2. uni grads want jobs that use their skills
3. ppl find better jobs but have to leave their ones

Question 10

what is cylical UE and what is it also called

Answer 10

follows ups and downs of business cycle aka Demand deficient UE: rises when demand is too low to fully employ country’s resources

Question 11

what happens to cyclical UE in recession and upswing

Answer 11

recession - agge exp falls = investment falls = confidence falls = (profits are low so firms lay of workers to reduce cost
upswing - cyclical UE falls (2007 = 0)

Question 12

what is structural UE and what are 3 reasons economic structure changes

Answer 12

mismatch of available and required skills

1. new technology
2. consumer demand changes (eco friendly)
3. productive factors change to accomodate above

Question 13

what has structural UE seen happen to the primary and manufacturing sectors

Answer 13

primary - mining jobs falls

manufacturing - labour inenstive change to capital intesnive

Question 14

why timeline IS structural UE and what SHOULD it be

Answer 14

should be temporary people can retrain and find new jobs

but is long term people cant retain quick enough especially people > 45

Question 15

what is the natural rate of UE (current rate?)

Answer 15

minimum level of UE which can be achieved given current characteristics of lab mkt 4.5 - 5%

Question 16

how is natural rate of UE explained by frictional, structural

Answer 16

frictional UE - accounts for 1/3rd of NUE

structural - skills offered dont meed needs of firms

Question 17

how do minimum wages laws create natural rate of UE

Answer 17

create labour surplus (good for emplpyers bad for UE)

create employment barriers (demand doesnt equal supply)

Question 18

how do labour unions create natural rate of UE

Answer 18

associated with above equal rates of pay/inflexibility with regilated working hours/conditions

Question 19

explain output effects of UE and describe the GDP gap (draw graph)

Answer 19

UE labour is unused resource so output is less than could be

GDP gap represents UE’s cost of lost ouput + income

Question 20

how are welfare payments a cost a of UE

Answer 20

the total direct cost in lost wages + cost of welfare payments = 4.5% of GDP
this welfare could have been spent on other benefits like schools

Question 21

what are the distribution effects of UE

Answer 21

affect some groups more than others (minority, 15-19 year olds, middled aged, geographical location)
UE can created personal, family , socail problems

Question 22

describe the relationship between ifnlation and UE

Answer 22

UE is countercylical
inflation is procyclical
negative relationship