Unemployment/Employment Flashcards
Unemployment definition
Those willing and able to work, who are seeking work, but don’t have a job
Difference between voluntary and involuntary unemployment(not types of unemployment btw just features)
Voluntary-able to work, but aren’t willing to work(option to work)
Involuntary- able and willing to work,but dont get work(no option)
What is Disequilbrium uneployment(btw its not one of the 4 types)
Occurs when AD for Labour is less than the AS of labour(labour market is Disequilibrium)
Basically:
firms Demand for workers is less the amount of workers who need a job
When does equilibrium unemployment occur
When the labour market is equilibrium (AD for labour=AS for labour)
The 2 types of unemployment that are disequiblium unemployment
1)Cyclical unemployment
2)Real wage Unemployment
The 3 types of unemployment that are Equilibrium unemployment
1)Frinctional
2)Seasonal
3) structural
When does it occur(Cyclical unemployment)
In a recession (when theres a lack of AD)
What graph shows it (Cyclical unemployment)
AD/AS. - ad shift left
Chain of reasoning(cyclical unemployment)
1)in a recession, AD is low/decreses
2)due to any of the components of AD decreasing
3)Firms are selling less/decrease in profit
4)To maintain profit margins they decrease labour force
5)this Increases unemployment
Explaination of cyclical unemployment
On a graph
1)theres a recession
2)so:demand for labour decreases
3)AD shifts left
4)now theres excess supply
5)As thee is excess supply-demand for labour decreases
Recession meaning
Decline in economic growth(Real GDP)
Meaning/occurs when (Real wage unemployment)
Occurs when **wages are set above equilibrium **
Causing excess supply of labour
What type of graph (Real wage unemployment)
Demand/supply graph( drawn the same as AD/AS)
Wages(y axis)
Quantity of workers(x axis)
HOW IT MAY OCCUR (Real wage unemployment)
Wages can be set/pushed above equilibrium when:
1)Government set Minimium wages
2)Trade unions push wages up
How to draw wages being pushed above equilibrium on graph
1)Increase wage then go through both the demand/supply lines then down on both:
2)Should have Q, Qd and Qs(on x-axis)
Just wage and wage1
It should display excess supply- the supply on the far right and demand on the far left
How is equilibrium unemployment and natural rate of unemployment the same thing
even though the labour supply is equal to the labour demand(equilibrium) there is still going to be unemployment- The natural rate of unemployment
The 3 types of unemployment within the Natural rate of unemployment/at Equlibrium
1)Frictional
2)structural
3)Sesonal
What is Frinctional unemployment
Workers move from 1 job to another
In **hopes of finding there perfect job88
What is seasonal unemployment
Temporary decrease or increase in labour demand
Between seasons
Structural unemployment meaning (the most important unemployment at equilibrium)
Immobailty of labour
due to long-term change in an industry
For example:AI replacing car builders
The 2 types of Immobility of labour/why it causes people to stay unemployed for a long time
1)Occuptional-cant get a job because u lack the skill setto work in a different industry
2)Geographical-cant get a job,because of your Location
Reasons for immobility of Labour(long-lasting unemployment)
1)TECHNOLOGY ADVANCEMENTS
E.G-mass replaces workers in the manufacturing industry
2)Industry loses their Competitive advancements
An example of technology advancements causing Immobality of labour
Occupational- an ex-car builder who is willing to work, but can’t find a job as the car industry now uses Robert’s to manufacture(Tech advancements)
Immobility of labour meaning
Remaining unemployed for a long time
What causes Cyclical unemployment/Demand deficiency unemployment (same thing)
Lack of aggregate demand, which occurs in recessions
A change from abroad that increases unemployment
Globalisationcontributes to structural unemployment
1)when production moves abroad, due to lower labour costs
2)skilled workers from theses industries will struggle to find work(occupational immoablity)
Due to:the industrys decreasing in size
Where should maximum prices be set
Set below equilibrium
