Unemployment

Question 1

Define employed

Answer 1

People in paid work. Includes employees and those who are self-employed.

Question 2

Define unemployed

Answer 2

Those of working age, who are actively seeking employment, willing and able to work but do not have a job.

Question 3

Define full-time employment

Answer 3

Working the hours/days associated with a particular job.

Question 4

Define part-time employment.

Answer 4

Working a proportion of the hours of a full-time job.

Question 5

Define the active population

Answer 5

The labour force of working age 16-65.

Question 6

Define the inactive population

Answer 6

People age 16-65 not seeking work, such as students, children, the retired, etc.

Question 7

Define underemployed

Answer 7

Employees who are either seeking to work longer hours/full-time or those working in jobs below their skill level. E.g. someone with an astrophysics degree working for McDonalds.

Question 8

How does the claimant count measure unemployment?

Answer 8

The claimant count records all claiming Job Seekers Allowance.

Question 9

What are the prerequisites for JSA (4)?

Answer 9

You must be over 18 years old, not be in full-time education, be available to work and be actively seeking work.

Question 10

Who conducts the UK Labour Force Survey?

Answer 10

The Office for National Statistics (ONS).

Question 11

How does the UK Labour Force Survey measure unemployment?

Answer 11

Approx. 40,000 households and 80,000 individuals are interviewed about their employment situation, and the results are scaled up to represent the whole of the UK’s population.

Question 12

The ONS uses the International Labour Organisation’s (ILO) definition of unemployment. What is their definition?

Answer 12

Anyone over the age of 16 can be classified as employed, unemployed or economically inactive.

Question 13

What are the 5 causes of unemployment?

Answer 13

1) Frictional unemployment
2) Seasonal unemployment
3) Structural unemployment
4) Cyclical (or demand deficient) unemployment
5) Real wage inflexibility

Question 14

Define frictional unemployment

Answer 14

Short-term unemployment as workers move between jobs. The rate of this depends on employment opportunities, the level of unemployment benefits and redundancy pay. It is the most common type of unemployment and also the least concerning.

Question 15

Define seasonal unemployment

Answer 15

Unemployment caused by seasonal labour demand shifts. E.g. tourism jobs plummet in the winter and peak in the summer, retail jobs peak near Christmas.

Question 16

Define structural unemployment

Answer 16

Unemployment stemming from industrial reorganisation, such as an industrial decline or technological advancements. E.g. the mining industry’s decline in the UK.

Question 17

Define cyclical unemployment

Answer 17

Unemployment caused by a fall in AD due to shifts in the trade/business cycle. There are less jobs available in a recession, and more available in a boom.

Question 18

Define real wage inflexibility

Answer 18

Unemployment caused when real wages are stuck at a level above what is needed to reduce unemployment. Firms may be willing to pay workers less and workers may be willing to accept this, but factors like the minimum wage prevent the price of labour from falling.

Question 19

What are the benefits of migration for an economy (6 factors)?

Answer 19

1) Migrants are less likely to claim benefits.
2) Migrants increase employment figures and are usually of working age.
3) They represent good value for money for firms as they are hard working but demand less money.
4) Migrants close skills shortages, such as in healthcare.
5) Larger workforce.
6) More tax payers.

Question 20

What is a drawback of migration for an economy?

Answer 20

Increased migration increases the supply of labour , reducing the equilibrium price, causing wage rates to rise slower than inflation.

Question 21

What are the drawbacks of unemployment to firms (2 factors)?

Answer 21

1) A loss of demand for their goods/services, as consumers have less disposable income.
2) Long-term unemployment can cause skills shortages, making it hard for firms to find high quality workers.

Question 22

What are the drawbacks of unemployment to the government (4 factors)?

Answer 22

1) Increased benefit payments.
2) Loss of income tax and national insurance.
3) The cost of retraining workers.
4) The cost of subsidising employers to encourage employment.

Question 23

What are the impacts of unemployment to local communities (4)?

Answer 23

1) Increased crime rates.
2) Run-down housing.
3) Closing of local businesses.
4) Degrading of the local environment

Question 24

What are the impacts of unemployment to the unemployed (4)?

Answer 24

1) Stigma of being unemployed.
2) Loss of earnings.
3) Increased chances of mental health issues, e.g. depression, stress and family breakdowns.
4) Long-term costs of deskilling, making it harder to find a new job.