11.2 - employment and unemployment Flashcards
(21 cards)
What is involuntary unemployment?
occurs when workers are willing to work at a current market wage rates but there are no jobs
What is voluntary unemployment?
occurs when workers choose to remain unemployed an refuse job offers at the current market wage rates
What is frictionally unemployed?
unemployment that is usually short term and occurs when a worker switches between jobs
What is frictionally unemployed also known as?
transitional unemployment
What is the search theory of unemployment?
helps to explain frictional unemployment –> if a doctor looses their job, although there is employment available in the form of less well payed jobs, this job is considered worse than the previous and the person will not take the job
What is structural unemployment?
long term unemployment occurring when some industries are declining, even though other industries are growing
When does structural unemployment occur?
occurs within a growing industry, if automation reduces the demand for labour, and when production requires new skills not possessed by the workers who lose their jobs
what is under-employed?
people who work part time because they cannot get a full-time job or would like more hours on their current job
What is the problem with zero hours contracts?
do not guarantee a min number of hours
what has happened with zero hours recently?
rose from 1/4 of 1million in 2011 to 1 mil in 2018 - gained popularity with employers and younger people
What is deindustrialisation?
the decline of manufacturing industries, together with coal mining
What is cyclical unemployment?
unemployment caused by fluctuations in the economy, caused by the lack of aggregate demand within the economy, occurring when the economy goes into recession/depression
What is cyclical unemployment also known as?
Keynesian unemployment or demand-deficient unemployment
How can international competition lead to structural unemployment?
decline in manufacturing industries as a result of international competition can also lead to structural unemployment
How has structural unemployment risen in the tertiary sector?
increase in AI and automated services has reduced the need for workers. However, call centres have seen an increase in employment but as AI continues to develop, this may fall.
What did Keynes think was the solution in the Great Depression?
deficient aggregate demand caused the crisis in the 1930’s, as the economy has settled into unemployment equilibrium, Keynes believed that cyclical unemployment is involuntary
Where on the cyclical employment diagram is deficient aggregate demand?
between AD1 and AD2
why might have AD1 fallen to AD2 on the deficient aggregate demand diagram?
if business or consumer confidence collapses
what happens if wages are inflexible and there’s cyclical unemployment?
deficient AD and cyclical unemployment will persist
What is say’s law?
states that supply creates its own demand as whenever an output is supplied, factor incomes such as wages and profits are generated and can be spend to purchase output (demand)
What is seasonal unemployment?
unemployment arising in different seasons of the year, caused by factors such as the weather
