2.1.3 employment and unemployment

Question 1

unemployed (def.)

Answer 1

someone who is not working but actively seeking for work

Question 2

what is a country’s population divided into?

Answer 2

labour force

non-labour force

Question 3

labour force (def.)

Answer 3

consists of all workers actively working and the unemployed - who are seeking work

usually between the ages of 16-65

Question 4

non-labour force (def.)

Answer 4

all of those not seeking work - economically inactive

Question 5

what are the two measures of unemployment in the UK?

Answer 5

the international labour organisation (ILO) survey

the claimant count

Question 6

what is the ILO labour force survey?

Answer 6

an extensive survey which is sent to a random sample of around 60,000 UK households every quarter

Question 7

what is the ILO criteria?

Answer 7

ready to work within the next two weeks

have actively looked for work in the past one month

Question 8

what is the claimant count?

Answer 8

the number of people claiming job seekers allowance (JSA) in the UK

Question 9

underemployment (def.)

Answer 9

labour not employed to its full potential

Question 10

when is someone underemployed?

Answer 10

they want to work more hours than they currently do

they are working in a job that requires lower skills e.g. an architect working as a PT

Question 11

how is underemployment a response to cyclical unemployment?

Answer 11

workers who have lost their jobs in a weak economy are willing to take part-time jobs/accept roles outside of their main skill base

Question 12

how is underemployment a consequence of structural unemployment?

Answer 12

unless workers re-train and gain new skills, it will be hard for them to gain full employment

Question 13

unemployment rate formula

Answer 13

UR = (number of people actively seeking work / total labour force) x 100

Question 14

employment rate formula

Answer 14

ER = (number of people in employment / population of working age) x 100

Question 15

labour force participate rate formula

Answer 15

LFPR = (labour force / total population) x 100

Question 16

inactivity rate formula

Answer 16

IR = (inactive people of working age / working age population) x 100

Question 17

causes of unemployment

Answer 17

structural unemployment

cyclical/demand deficient unemployment

seasonal unemployment

frictional unemployment

real wage unemployment

Question 18

structural unemployment (def.)

Answer 18

when there is a mismatch between jobs and skills in an economy

usually happens as the structure on an economy changes

Question 19

cyclical/demand deficient unemployment (def.)

Answer 19

caused by a fall in AD in an economy

typically happens during a slow down/recession

Question 20

seasonal unemployment (def.)

Answer 20

occurs as certain seasons come to an end and labour is not required until the next season

Question 21

frictional unemployment (def.)

Answer 21

occurs when workers are between jobs - short-term unemployment

workers have voluntarily left their previous job to search for another

Question 22

real wage unemployment (def.)

Answer 22

occurs when wages are inflexible at a point higher than the free-market equilibrium wage

caused by the existence of minimum wage laws

Question 23

significance of migration on employment

Answer 23

immigrants fill vacancies that locals will not fill e.g. manual labour, dangerous and low-skilled jobs

increased supply of labour may push down wages in the economy - lower average wages an an incentive for employers to hire more workers, this may increase employment

immigration = increased population = increased consumption in the economy, greater output requires more labour so it creates more jobs

Question 24

significance of migration on unemployment

Answer 24

immigrants may displace some locals - increasing the level of unemployment

dependents of immigrants may be unable to find work and register as unemployed

Question 25

what is the effect of unemployment on firms?

Answer 25

loss of sales revenue

loss of output/production

changes the skill level in the economy

Question 26

what is the effect of unemployment on consumers/individuals?

Answer 26

loss of income

health issues - mental instability, increased stress

sense of failure

Question 27

what is the effect of unemployment on governments?

Answer 27

increased spending on benefits

less tax revenue

increased spending on re-training

Question 28

what is the effect of unemployment on an economy?

Answer 28

increased anti-social behaviour - vandalism and crime

increased homelessness