Unempolyment Flashcards
Define unemployment
When a person is available and willing to work at a going wage but can not find a job despite an active search for work.
Define labour market
Everyone with a job who wants a job
What are the two methods of calculus ting unemployment
Labour Force Survey (small) Claimant count (about 60000)
Name the 7 types of unemployment
Structural Frictional Cyclical Seasonal Real wage Youth Long term Equilibrium
Explain each type of unemployment
Structural - mismatch between skills, immobility of Labour can be caused by new technology, outsourcing of production overseas
Frictional - transitional unemployment as people move between jobs eg university graduates
Cyclical- is when there is too little AD , for example when there is a recession , likely to happen when there is a negative output gap
Seasonal- have a job for a particular few months eg Father Christmas or ski instructors
Real wage - there is an excess supply of workers and it happens when wages are set above the equilibrium level , causing the supply of Labour to be greater than the demand
Youth- young people out of work risk a permanent fall in their expected lifetime earnings from work
Long term unemployment- affects people who have been out of work for at least one year , the longer the duration of unemployment the harder for people to get a job ( skills decline, motivation decreases so employers are less likely to hire long term unemployed people)
Equilibrium - can be caused because of people who are economically independent or the wages are too low so they don’t feel the need to be employed.
What is underemployment?
It occurs when people are counted as looking for a job or actively searching for a new job with longer hours to replace their current job
Describe natural rate of unemployment
It is the rate of unemployment when the Labour market is in equilibrium . It is unemployment caused by structural factors (mismatched skills) frictional and surplus unemployment
What does NAIRU stand for
Non accelerating inflation rate of unemployment
What is the natural rate of unemployment for the UK?
4-5%
What is the Labour force participation rate ?
Labour force participation rate is defined as the section of working population in the age group of 16-64 in the economy currently employed or seeking employment. People above the age of 64 are not reckoned in the Labour force
Give 2 ways in which unemployment data might indicate economic health accurately?
More workers = more output - employment data can show how much output is being produced
Hint of how much inflation there may be in the future
How could the government look to lower the natural rate of unemployment?
Job centres
Unemployment apps
Education- especially helpful for structural make Labour more flexible
How can you reduce occupational immobility?
Education and skill development from early stages
Be open to developing new ideas
Financial programmes, subsidised courses
How do you reduce the geographical immobility of Labour ?
Good transport systems - fast trains
Relocation packages
Better communication systems - work from home
What is the brain drain?
A brain drain describes the movement of highly skilled or professional people from their own country to another country where they can earn more money
