Unemployment and Employment Flashcards
What is Unemployment?
- People of a working age who are willing, able, and available to work within the next two weeks but cannot get a job.
What does the term ‘Economically active’ mean?
- Everyone who is employed plus everyone who is unemployed.
What does the term ‘Economically inactive’ mean?
- Those age 16-64 who are not seeking work.
What does Full employment mean?
- All those people who are economically active and are willing, able, and available to work can find employment.
What does Involuntary unemployment mean?
- Workers who are willing to work at current market wage rates but there are no jobs available.
What does Voluntary unemployment mean?
- Workers choose to remain unemployed and refuse job offers at current market wage rates.
What is the Claimant Count?
- The number of people claiming Job Seekers Allowance and Universal Credit.
What is the Labour Force Survey?
- A quarterly survey of 25,000 households (55,000 individuals) compiled by the ONS.
What are the problems of measuring unemployment?
- Underemployment: can’t find a job suitable for qualifications and experience or cannot find enough hours to work.
- Hidden unemployment: similar to underemployment; workers lose their jobs and don’t actively seek a new job as the costs of seeking are not worth it.
- Hard to measure the scale of inactivity.
- Sample errors.
What are the instances where employment and unemployment would both grow?
- A population increase.
- A fall in the inactivity rate.
What are the impacts of unemployment?
- Reduced demand for goods/services.
- Lower living standards.
- Social costs.
-De-skilling of human capital.
-Reduced investment, reduced tax revenue.
-Increased welfare spending.
What are the problems with the Claimant Count?
- Underestimate unemployment statistics:
- Not everyone who is eligible signs on.
- Under 18s and Over 60s don’t count.
- Overestimate unemployment statistics:
- Some people who claim JSA/UC aren’t actively seeking work.
- Some have jobs in black economy but continue to claim benefits.
Advantages of Labour Force survey?
- Internationally recognised.
- Potential for analysis across countries.
- Picks up trends in sectors.
- More accurate than other measures like the Claimant Count.
Disadvantages of the Labour Force Survey?
- Subject to sampling and extrapolation errors.
- Has recently seen a collapse in response rates.
What are the five types of unemployment?
- Structural (S side)
- Frictional (S side)
- Seasonal (D side)
- Cyclical (D side)
- Real wage (S side)
What is Structural unemployment? (Supply side)
- Long term economic shifts leading to long term unemployment.
- Occurs as a result of occupational and geographical mobility: geographical immobility, can’t get to where jobs are, occupational immobility: can’t move into jobs -> don’t have the skills.
- Long-term shifts in advancements may lead to eventual mismatches between the skills of a worker and the job itself.
-> Mining communities, Car manufacturers.
What is Frictional unemployment? (Supply side)
- Workers moving between jobs.
- Short-term, exists because workers do not have perfect and immediate information about every job opportunity that may be available to them.
- Happens as a result of people finding a job suited to their skills, preferences, or location.
-> Relocation to a new city.
What is Cyclical unemployment? (Demand side)
- When there is a downturn in the economy, reducing demand for goods and services, which leads to job losses.
- For example, during COVID, demand decreases as a result of the pandemic, businesses cannot afford to pay wages.
- Temporary.
What is seasonal unemployment? (Demand side)
- When people are unemployed at certain times of the year because their jobs are only needed during specific seasons.
- Some industries have high demand during certain months and low demand during others.
- Ice-cream truck drivers or beach resorts act as an example.
What is Real Wage unemployment?
- When wages are too high above the market equilibrium, leading to an excess supply of labour and not enough demand from employers.
