week 8 Flashcards
define full employment
Full employment is when everyone who is willing and able to work at the current wage rate can find a job, with only a small level of natural unemployment
define unemployment
Refers to those over 15 working less than an hour per week and actively seeking work.
the goal of full employment
The maximum sustainable rate of reduction in unemployment by lifting the pace at which
economic growth can be maintained without running into inflationary and external pressures
Governments aim for everyone who wants a job to be employed → but in a market
economy, some level of unemployment is necessary for efficient resource allocation.
describe NAIRU
The full employment goal aims to achieve the lowest unemployment rate possible before
inflation accelerates
→ known as the Non-Accelerating Inflation Rate of Unemployment
What is NAIRU influenced by
long-term unemployment, primarily
➔
Structural
➔
Hard-core unemployment.
what’s australias NAIRU estimate and why has it changed
5% to 4.25% due to factors such as Greater labour market flexibility
●
Growth in casual and gig economy jobs
●
Rising underemployment
●
Reduced worker bargaining power
●
Increased competition in labour markets
what’s structural unemployment
When workers’ skills do not match industry needs.
what’s frictional unemployment
When workers are temporarily between jobs.
what’s seasonal unemployment
When jobs are available only at certain times of the year (e.g., fruit
pickers, ski resort workers).
what’s hard core unemployment
When individuals face barriers to employment due to physical, mental,
or other issues.
define unemployment rate
The unemployment rate represents the percentage of
the labour force that is unemployed.
how is the unemployment rate calculated
unemployment divided
by employment +unemployment
(x 100)
define the participation rate
as the percentage of the total ‘working age’ population (over 15)
who are members of the labour force → who are participating in the sense of either working or
willing and able to start work, and actively seeking work.
how to calculate the participation rate
labour force
divided by working age population
( x 100)
define hidden unemployment
Discouraged job seekers are people who want work but are not counted as unemployed because they have stopped looking due to poor job prospects
