2.1.3 Employment and unemployment Flashcards
(22 cards)
What are the two measures of unemployment?
- The claimant count.
- The International Labour Organisation (ILO) and the UK Labour Force Survey.
How does the International Labour Organisation (ILO) measure unemployment?
It uses data from surveys taken in each country in order to calculate the measure of unemployment.
It defines unemployment as individuals of working age who are without work, actively seeking work, and available for work.
It allows for comparisons between countries, but it is limited by differences in sampling between countries.
How does the Labour Force Survey work?
It asks people if they meet the following criteria:
- Been out of work for 4 weeks.
- Able and willing to start working within 2 weeks.
- Workers should be available for 1 hour per week. Part time unemployment is included.
How does the claimant count measure unemployment?
It records the number of people claiming unemployment-related benefits, such as Jobseeker’s Allowance.
Who are the unemployed?
Those able and willing to work, but are not employed. They are actively seeking work and usually looking to start within the next two weeks.
Who are the underemployed?
Those who have a job, but their labour is not used to its full productive potential.
This can result in part-time work, low wages, or jobs below an individual’s skill level.
What is the employment rate and what does it indicate?
It measures the proportion of the working-age population in employment. A rising employment rate indicates economic growth.
What is the unemployment rate and what does it indicate?
It measures the proportion of the labour force actively seeking work. A high unemployment rate indicates economic problems.
What is the inactivity rate and what does it indicate?
It measures the proportion of the working-age population that is not in the labour force. It can indicate a lack of job opportunities or demographic factors.
What are the five causes of unemployment?
- Structural unemployment
- Frictional unemployment
- Seasonal unemployment
- Cyclical unemployment
- Real Wage Inflexibility
What is structural unemployment?
It occurs when there is a mismatch between the skills of the workforce and the requirements of available jobs.
What is frictional unemployment?
It is temporary unemployment when individuals are between jobs or entering the workforce.
What is seasonal unemployment?
It is linked to seasonal variations in demand, e.g. tourism or agriculture.
What is cyclical unemployment?
It arises from a lack of aggregate demand during economic downturns.
What is real wage inflexibility?
It occurs when wages are too high, leading to job cuts or an unwillingness to hire.
What is the significance of migration for employment and unemployment?
Migration can impact employment by changing the supply of labour in specific regions. Immigrants may fill labour gaps, but this can also lead to wage pressures.
What is the significance of skills for employment and unemployment?
Skills are crucial for employment. A highly skilled workforce is more adaptable and less prone to unemployment in a changing economy.
What are the effects of unemployment on consumers?
- If consumers are unemployed, they will have less disposable income and their standard of living may fall as a result.
- There are psychological consequences of losing a job, which could affect mental health.
What are the effects of unemployment on firms?
- Higher unemployment can lead to a larger labour pool, potentially reducing wage pressures.
- Reduced income can lead to lower consumer spending due to less disposable income, impacting firms profits.
- Producers which sell inferior goods might see a rise in sales.
What are the effects of unemployment on workers?
- With unemployment, workers might lose their existing skills if they are not fully utilised.
- Loss of income.
- Reduced well-being.
- Inequality.
What are the effects of unemployment on the government?
- If the unemployment rate increases, the government will have to spend more on Job Seekers Allowance which incurs an opportunity cost as the money could have been invested elsewhere.
- The government would also receive less revenue from income tax, and from indirect taxes on expenditure, since the unemployed have less disposable income to spend.
What are the effects of unemployment on society?
- There is an opportunity cost to society, since workers could have produced goods and services if they were employed.
- There is a risk of negative externalities in the form of crime and vandalism, if the unemployment rate increases.
