Unemployment And Employement Flashcards
What are the causes of high unemployment?
- Lack of skill
- Location
- Reluctant Employers
- Falling retirement rates(Fewer jobs available)
- Weak Macro Fundamentals(Low GDP)
Disincentive effect
-Something that discourages an individual from performing an action(Eg. low pay for high labour jobs)
Policies to reduce unemployment (Labour Demand)
- Macro Stimulus Policies
- Cutting the cost of employing workers
- Competitiveness policies
Examples of Macro Stimulus Policies
- Low interest rates
- Depreciation in exchange rate
- Infrastructure investment projects
Examples of cutting the cost of employment
- Reductions in national insurance contributions(tax)
- Financial support for apprenticeship programs
- Extra funding for regional policy(business grants)
Examples of competitive policies
- Reductions in corporation tax(increase investment)
- Tax incentives for research(Innovation spending)
- Enterprise policies to lift the rate of new business start-ups
What are the labour supply policies to reduce unemployment?
- Reducing occupational immobility(Eg. Better funding for effective training)
- Improving geographical mobility(Eg. Rise in house building)
- Stimulate stronger work incentives(Eg. Higher min wage)
What is a nominal wage?
-Wages received in the form of money. Eg. if you get £15/h the nominal wage would be £15/h
What are real wages?
- Wages adjusted for inflation or in the terms of the amount of good or services the can be brought (Purchasing power).
- Eg if nominal wage increased by 4% and inflation raised by 2% the the real wage increases by 2%.
What is real wage unemployment?
-When wages are set above the equilibrium causing supply of labour > demand for labour.
What’s demand deficient?
-The result in the decline of overall economic activity leading to a decrease in the demand for labour.
What’s the equilibrium wage rate?
-When the aggregate labour market is in equilibrium (Also called the Natural Rate of Unemployment(NRU))
What is meant by wage freeze?
-When the real wage rate is 0% (Nominal wage = Real wage)
Advantages of low unemployment
- Increased employment boosts the GDP
- More people in work so there’s more tax paid
Disadvantages of low unemployment
- Extra spending from expanding may worsen the current account
- Low demand for labour
What are the 4 main types of unemployment?
- Cyclical (When there’s a fall in AD leading to a fall in GDP, resulting in a lack of goods) Aka Keynesian unemployment
- Structural (Miss match between skills & jobs available) Eg. coal factories
- Seasonal (casual unemployment) Eg. summer jobs
- Frictional (When workers are stuck between jobs) Eg. moving from one school to another
What is NEETS and what does it stand for?
- Not in Education, Employment, or Training
- Effective outsiders in the labour market
- Key area for policy interventions Eg apprenticeship schemes
What are some pros and cons of unemployment data?
Pros: -Local and regional job loss data -New figures in each month Cons: -Lots of hidden unemployment Eg Drug dealers -Sample errors
Formula for the employment rate
% of employed compared to total population
What is the claimant count and the Labour Force Survey?
- Claimant Count(JSA) People claiming unemployment related benefits(Must be actively searching)
- LFS is all people actively searching and able to work whether or not on benefits
What’s long-term unemployment, the labour force and full employment?
- Long-term is when you’re unemployed for at least a year
- The labour force are people available and willing to work
- Full employment is when there’s no available job vacancies
What are discouraged workers, and economically inactive workers?
- Discouraged are when workers are put off to work a certain job usually due to low pay
- Economically inactive workers are people who can work but don’t want to
Formula for unemployment rate
% Unemployed compared to total population
What’s under-employment?
-When you’re currently in work but actively looking for additional work
