2.1.3 Employment and Unemployment

Question 1

what is unemployment?

Answer 1

when someone is able to work and is activley seeking work but they are not currently working

Question 2

how is the unemployment rate calculated?

Answer 2

the % of unempolyed people out of the active population

Question 3

what is the unemployment level?

Answer 3

the number of people unemployed

Question 4

how is the employment rate calculated?

Answer 4

number of employed people/ total working age population

Question 5

Answer 5

Question 6

how is the activity rate calculated?

or articipation rate

Answer 6

active population/ working age population

Question 7

why would
* employment rates
* unemployment rates
fall

Answer 7

emplyment:
number of people emplyed decreased, working age population increased

unemployment rate:
number of people economically active increases, unemplyment decreases

Question 8

what would the effect of an increase in immigration be on employment and unemployment level?

Answer 8

Increase employment if they have definite secure jobs
Increase In population size,increase in labour supply, decrease in real wage price, increase in demand for labour
Increase in use of public services, increase in jobs made in public services

Question 9

describe the ILO Labour Force survey

International Labour orgainisation

Answer 9

• from 80,000 households ask if out of work for 4 weeks and are able to start week in next 2 weeks
• then they are classified as ‘unemployed’
• then use this data as a sample to estmate the unemplyment rate for UK

Question 10

describe the claimant count

Answer 10

• measures how many people are claiming benefits through job seekers allowance

Question 11

what are the limitations around the two measures of unemployment?

Answer 11

• **ILO Labour Force Survey: ** not a representative, as is just a sample
• Claimant Count: not everyone seeks benefits, if have big savings then not allowed (underestimates)

ILO is the official measurement

Question 12

what is under employment?

Answer 12

when one is currently working however
* working fewer hours than they want to
* underusing their skills

Question 13

what are the 5 different types of unemployment?

Answer 13

• real wage/ classical unemployment
• structural unemployment
• cyclical/demand unemployment
• frictional unemployment
• seasonal unemployment

Question 14

define claimant count

Answer 14

a measure of unemplyment; the number of people recieving benefits for being unemployed

Question 15

define unemployment

Answer 15

those who are without work and able to start working in the next 2 weeks and have been activley searching for work in the past 4 weeks

Question 16

define the labour force survey

Answer 16

a measurment of unemployment which surveys people and classes thm as employed, unemployed or economically uneavtive as per to the ILO definitions

Question 17

what is the active population?

Answer 17

people of working age (16-64) who are able to work and actively seeking work or activley working

aka the workforce

Question 18

what is the inactive population?

economically inactive

Answer 18

those of working age who are not activley seeking work and not working

Question 19

how is is the unemployment rate calculated?

Answer 19

(number of unemployed people/ economically active population) × 100

percentage of people unemployed

Question 20

how is the employment rate calculated?

Answer 20

(number of people in employment/number of people aged 16-64) × 100

Question 21

what is real wage unemployment?

Answer 21

• wages above equilibrium
• firms cannot afford
• excess of supply of labour

aka classical unemployment

Question 22

show real wage unemployment graphically on a labour market diagram

Answer 22

Question 23

what are some causes of real wage unemployment?

Answer 23

• national minimum price set by goverment
• arguments by trade unions

Question 24

what is demand deficent unemployment?

Answer 24

1. no one wants to buy anything (no demand for goods and services)
2. firms produce less, downsize, fire workers
3. firms must therefore reduce their derived demand for labour
4. creating unemployment

Question 25

show demand deficent unemployment graphically

Answer 25

Question 26

what is structural unemployment?

Answer 26

when the structure of an economy changes, jobs shift from one sector/location to another, leaving people unemployed

Question 27

what are the two causes of structural employment?

Answer 27

* occupational immobility * geographical immobility

Question 28

what is occupational mobility?

Answer 28

lack of any other skills stops people from switching between job sectors

Question 29

what is geographical imobility?

Answer 29

when workers can' move between diffferent jobs because struggle to move to different areas eg: London= time consuming, expensive, family ties

Question 30

how can the goverment intervene with * geographical imobility * occupational imobility

Answer 30

* geographical: improving transport links, relocation subsidies * occupational: education (training/ apprenticeships)

Question 31

what is frictional unemployment?

Answer 31

temporal unemployment while searching for a new job

Question 32

what is seasonal unemployment?

Answer 32

unemplyment during certain seasons, as their job is seasonal dependant

Question 33

why may unemployment be increasing?

Answer 33

* increased automation: less low skilled jobs eg: cashiers, replacing human labour * slower economic growth: less job creation * falling incomes: less consumption, less demand for labour * uncertainty in economy: discourages firms from investing and expanding

Question 34

why may under emploment increase?

Answer 34

* recession/ lack of demand in the market: cannot work as many hours as they want * increased use of technology/ automation: replacing human labour *

Question 35

why is the claimant count generally lower than the ILO?

Answer 35

* It is becoming more difficult to claim unemployment benefits: factors such as savings as accounted for * stigma issues (none for ILO as it is a private survey but high stigma for benefits) * frictional unemployment not shown in claimant count but is shown in ILO

Question 36

what is the effect of immigration on employment?

Answer 36

* increased supply of labour, lower wages, increased deamnd for labour * increased use of public services, more jobs in public services * more population means increased consumption, more jobs * immigrants can fill in vacancies that cannot be filled by indigenous workers

Question 37

what are the effects of immigration on unemployment?

Answer 37

* may not have sufficent skills, increase in unemployment * in short term increase in immigration means will be searching for jobs increases unmeployment

Question 38

evaluation for immigration effects on employment and unemployment

Answer 38

* magntitude of net migration: emigration figures not included * depends on the skill levels of the migrants * different industries affected differently * if economic growth then can take on more labour without unemployment increasing