Unemployment

Question 1

level of employment definition

Answer 1

the number of people who are willing and able to work (economically active) but cannot find work.

Question 2

rate of unemployment definition

Answer 2

the percentage of the labour force out of work

Question 3

governement objective

Answer 3

maintain full employment

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

6 major causes of unemployment

Answer 5

• cyclical unemployment
• structural unemployment
• frictional unemployment
• real-wage unemployment
• regional unemployment
• season unemployment

Question 6

cyclical unemployment

Answer 6

Not enough demand for the specific job, and too many qualified. e.g. philosophy graduates

Question 7

structural unemployment

Answer 7

reducing unemployment due to a long-run decline in industry demand

Question 8

frictional unemployment

Answer 8

unemployment of people who have newly entered the job market from graduating, etc.

Question 9

real-wage unemployment

Answer 9

when people who are actively seeking work are not willing to work for the wage offered

Question 10

regional unemployment

Answer 10

when there is unemployment in a certain region through a mismatch between skills demanded and skills available. e.g. coal mining - south wales

Question 11

season unemployment

Answer 11

when certain industries do not work at certain times of the year, as there is not enough demand. e.g. resorts

Question 12

what is the labour force survey

Answer 12

survey of 60,000 households done 4 times a year. measured by analysis data from employers.

Question 13

what is the claimant count

Answer 13

monthly count of people claiming unemployment related benefits.

Question 14

to be considered unemployed

Answer 14

• out of work for more than 4 weeks
• able to start work in next 2 weeks
• available at least one hour a week

Question 15

advantages of labour force survey

Answer 15

• includes groups excluded by claimant count
• included part time workers
• collects additional data & levels of skills
• widespread generalisable data

Question 16

disadvantages of labour force survey

Answer 16

• sample survey
• open to bias
• expensive to administer
• difficult to decide whether sick or actively seeking work

Question 17

Claimant count method advantages

Answer 17

• full count
• data is already available
• cheap

Question 18

disadvantages of claimant count

Answer 18

• excludes people who cannot claim unemployed benefits

- fraudulent claims

Question 19

consequences of unemployment

Answer 19

• loss of income
• decline in living standard
• may suffer from poor health / family break-ups
• children with unemployed parents tend to suffer worse health and perform less well academically

Question 20

consequences for economy

Answer 20

• lost output
• fall in tax revenue & increase in government spending on benefits and policing costs
• costs to the unemployed
• social deprivation and worsening inequality of income and wealth
• lost tax revenue
• pressure on other government spending
• hystersis: more difficult to find job longer out of work
• negative effect on LRAS