Employment

Question 1

Unemployment rate

Answer 1

The percentage of the labour force who are out of work

Question 2

Formula of the unemployment rate

Answer 2

The unemployed x 100%

Labour force

Question 3

Full employment

Answer 3

A situation where those wanting and able to work can find employment at the going wage rate

Question 4

Full employment

Answer 4

A situation where those wanting and able to work can find employment at the going wage rate

Question 5

Unemployment measures

Answer 5

Labour Force Survey
A measure of unemployment based on a survey using the ILO definition
of unemployment
International Labour Organisation
A member organisation of the UN that collects statistics on labour market conditions and seeks to improve working conditions
Data is collected through a monthly survey of 60,000 households

Claimant Count
A measure of unemployment that includes those receiving unemployment-related benefits
Data is collected as a direct measurement of those claiming unemployment benefits

Question 6

Difficulties of measuring unemployment

Answer 6

Labour force survey- truer reflection of the number of people actually unemployed
Internationally accepted collection method that allows for comparison
Collection method is a survey
so is subject to sampling errors

Claimant count- not all unemployed people are eligible to collect benefits
Much cheaper method of collection as benefit system is computerised
Very quick method to collect data and so the figure is available much rarity than the LFS

Question 7

Cyclical unemployment

Answer 7

Unemployment arising from a lack of aggregate demand

Question 8

Structural unemployment

Answer 8

Unemployment caused by the decline of certain industries and occupations due to changes in demand and supply
Steel- scunthorpe

Question 9

Frictional Unemployment

Answer 9

Short term, unemployment occurring where workers at In-between jobs

E.g.- bricklaying

Question 10

Costs of unemployment

Answer 10

Lost output- wasted resources (labour) that leads to productive inefficiency
Loss of tax revenue- if less people are working the government gains less tax revenue
Government spending on benefits:pressure on finances- opportunity cost
Pressure on other areas:long term unemployment causes increase in sickness, crime and the need for social housing
Costs to unemployed: poor health, family breakdowns and poverty
Hysteresis: loss of skills leading to long-term worklessness and loss of confidence

Question 11

Benefits of unemployment

Answer 11

May encourage people to look for a rewarding job
Gives people the opportunity to return to education and up-skill
Makes it easier for firms to fill vacancies with suitable applicants
Price levels fall, thus reducing inflationary pressure
May dissuade workers from seeking wage rises and taking industrial action