Employment and Unemployment

Question 2

What is the working population?

Answer 2

the total number of individuals who are of working age, typically considered to be those who are capable of and available for work. It includes both employed and unemployed individuals.

Question 3

What is the labour force?

Answer 3

Those who are either employed or actively seeking employment. It is a subset of the working population and represents the pool of people available for and actively engaged in productive work.

Question 4

What is economic inactivity?

Answer 4

not being engaged in the labour force, includes pensioners, students, homemakers, discouraged workers and others who are neither employed nor actively seeking employment.

Question 5

What is the labour force participation rate?

Answer 5

workers in the labour force compared to the number of people in the working population

Question 6

What is the employment rate?

Answer 6

the proportion of people of working age who are in employment (employees, self-employed, full time & part time

Question 7

What are the unemployed?

Answer 7

someone of working age, willing and able to work, and actively seeking work, but cannot find a job.

Question 8

What is the unemployment rate?

Answer 8

the percentage of the labour force that areunemployed (NB the labour force includes those in work and theunemployed)

Question 9

What is the Labour Force Survey?

Answer 9

this survey asks 60-70,000 UK households to self-classify as being employed, unemployed or economically inactive.

Question 10

What is the claimant count?

Answer 10

this counts the total number of recipients of Job Seeker’s Allowance (JSA) added to those looking for work to claim Universal Credit (UC).

Question 11

What are labour market flows?

Answer 11

People of working age can be employed, unemployed or economically inactive; over time they may ‘flow’ in and out and between these categories.

Question 12

What are types of unemployment?

Answer 12

• Regional
• Long term
• Mass
• Youth
• Discouraged workers
• Hidden
• Underemployment

Question 13

What is regional unemployment?

Answer 13

unemployment rate varies across regions.

Question 14

What is long term unemployment?

Answer 14

people unemployed for over 12 months

Question 15

What is mass unemployment?

Answer 15

1 in 10 of the labour force are unemployed

Question 16

What is youth unemployment?

Answer 16

unemployment rate (the proportion of the economically active population who are unemployed) for all 16 to 24 year-olds.

Question 17

What are discouraged workers?

Answer 17

inactive work-seekers who have ceased to seek work because they believe there are no suitable available jobs.

Question 18

What is hidden unemployment?

Answer 18

people who do not work but who are not counted in government reports, for example, people who have stopped looking for a job and people who work less than they want to.

Question 19

What is underemployment?

Answer 19

where individuals are employed, but their employment is insufficient in terms of hours worked, skill utilisation, or income to fully meet their economic needs or potential.

Question 20

What is the gig economy?

Answer 20

The gig economy is a work arrangement where people perform short-term, flexible, and often freelance work, typically through online platforms or apps, eg rideshare drivers, virtual assistants, and food delivery workers.
It is linked to zero-hour contracts - employment arrangements where workers are hired without a guarantee of work hours.

Question 21

What is technological unemployment?

Answer 21

the displacement of human workers by machines, automation, and technology, such as AI.
Rapid advances in technologyraises concerns about the potential for job loss, economic inequality, and the need for retraining and upskilling workers to adapt to evolving job markets

Question 22

What are causes of unemployment?

Answer 22

• Frictional
• Cyclical
• Structural
• Seasonal
• Real wage

Question 23

What is frictional unemployment?

Answer 23

short-term unemployment caused by people moving between jobs, moving to a new location, or re-entering theworkforce after a break.

Question 24

What is cyclical unemployment and what does it look like?

Answer 24

the unemployment rate rises during an economic downturn; it is caused by fluctuations in thebusiness cycle. Sometimes called demand-deficient unemployment. AD shifts left from AD1 to AD2; new equilibrium Y2 is below full employment income Yfe; some unemployed resources at Y2

Question 25

What is structural unemployment?

Answer 25

caused by changes in the economy, like the decline of certain industries or the rise of automation. It happens when there’s a mismatch between the skills & location of workers and the needs of employers. A lack of geographical and occupational mobility of labour contributes.

Question 26

What is seasonal unemployment?

Answer 26

seasonal workers, such as construction workers, retail assistants, might be without paid jobs due to the time ofyear when there is less need for their work

Question 27

What is real wage unemployment and what does it look like?

Answer 27

Caused by wages being too high relative to the productivity of workers; minimum wages and trade union activity can push the wage above its market equilibrium
Current wage is above market-clearing wage W1, causing an excess supply of labour = real wage unemployment

Question 28

What is full employment?

Answer 28

• An absence of cyclical unemployment (the output gap is closed)
• Number of job vacancies = number of people actively seeking work
  There will always be some unemployment – frictional as people move between jobs

Question 29

What are economic costs of unemployment?

Answer 29

loss of output foregone, fall in real incomes, lower standard of living, lower tax revenue, higher welfare costs, larger budget deficit, loss of workers to other countries (emigration) etc

Question 30

What are social costs of unemployment?

Answer 30

increase in poverty and welfare dependency, increase in physical and mental health increasing healthcare costs, link between persistent unemployment and social problems (eg vandalism, low level crime, shoplifting etc.)

Question 32

What are the benefits of some unemployment?

Answer 32

• Reduced risk of inflation – lower wage demands & price discounts
• Pool of unemployed available for growing businesses
• Increase in self-employment start-ups, more entrepreneurs/innovation