Employment & Unemployment

Question 1

Define employment level

Answer 1

Employment level- no. of people in work

Question 2

Define employment rate

Answer 2

Employment rate- proportion of people working relative to the size of the workforce

Question 3

Define workforce

Answer 3

Workforce- people of working age, willing & able to work … employed & unemployed

Question 4

What are the 2 ways of measuring unemployment?

Answer 4

1) The claimant count

2) U.K. Labour force survey

Question 5

What is the claimant count?

Answer 5

The claimant count- record’s no. of people claiming Jobseeker’s Allowance (JSA) or other benefits

Question 6

What are the evaluation points for the claimant count?

Answer 6

👍- quick & cheap to obtain data
👎- ✖️ present full picture of unemployment- if unable to work or working in voluntary capacity for ⬆️ than 16 hours a week then ✖️ claim
ALSO- stigma attached to claiming benefits … ✖️ all eligible claim & some non-eligible (unemployed BUT ✖️ apply for JSA)

Question 7

What is the U.K. labour force survey?

Answer 7

U.K. Labour Force Survey- measures ppl out of work in last 4 weeks & ready to start in next 2 weeks

Question 8

Who is the labour survey used by?

Answer 8

Used by ILO (international labour organisation) & official measure in 🇬🇧 & EU countries

Question 9

What does the labour force survey involve?

Answer 9

Involves face to face interview & then 📞 survey every quarter of 80,000 🏠holds- ask Q about members of 🏠hold out of work for 4 weeks & ready to start in 2

Question 10

What are the evaluation points for the labour force survey?

Answer 10

👍- ⬆️ inclusive than claimant count as applies to anyone aged ⬆️ 16
👎- survey data 6 weeks out of date by publish time

Question 11

What is underemployment?

Answer 11

Underemployment- worker employed BUT wants to work ⬆️ hours e.g. for ⬆️ 💵

Question 12

What is unemployment?

Answer 12

Unemployment- someone willing & available to work BUT ✖️ employed

Question 13

When has underemployment been prominent in real life?

Answer 13

⬆️ significantly after 2008 recession BUT unemployment figures misleading as shown to ⬇️- in reality job market experienced significant downfall as underemployment ⬆️

Question 14

What factors effect employment?

Answer 14

1) School 🏫 /compulsory training leaving age (18)
2) No. of school 🏫 leavers entering higher/further 📚
3) Net migration- difference between immigration (into country) & emigration (out of country)
4) Taxes & Benefits
5) Availability of jobs

Question 15

How does students choosing to go through higher education 📚 effect the job market?

Answer 15

👎 short term as initially workforce smaller- those in education 📚/training ✖️ economically active
👍 long term- 🏫 leavers ⬆️ employable- ⬆️ education & skills

Question 16

How many students enter higher/further education and could this figure change in the future?

Answer 16

• ⬆️ 40% of 👨‍🎓👩‍🎓 continue with 📚 after 18 in 🇬🇧

- BUT likely to ⬇️ due to ⬆️ university fees (£9000 a year)

Question 17

How does net migration (difference between immigration (into country) & emigration (out of country)) effect employment?

Answer 17

• ⬆️ both employment & unemployment

- 37% come to 🇬🇧 for 📚 & 34% for work

Question 18

How do taxes & benefits affect employment?

Answer 18

• ⬆️ taxes on income discourage/disincentivise ppl to work

- ⬆️ benefits discourage/disincentivise ppl to work

Question 19

How does the availability of jobs affect employment?

Answer 19

⬆️ employment if ⬆️ jobs available

Question 20

What is inactivity?

Answer 20

Ppl of working age BUT unwilling/unable to work

Question 21

What is a problem with inactivity figures?

Answer 21

Makes unemployment 👀 ⬇️ than reality because 👩‍🎓 👨‍🎓 👀 for work while studying, 👩 👀 for job to cover cost of 👶 care etc- ✖️ feature on unemployment figures- marked as inactive

Question 22

Which groups of people are classed as inactive?

Answer 22

Includes:

• 👩‍🎓 👨‍🎓in full time further 📚
• Those looking after 👶 or other dependants
• Those with health issues

Question 23

What is the classical view on the cause of unemployment?

Answer 23

Classical View:

• Unemployed because ppl unable OR ✖️ willing to work at going wage rate
• … unemployment solved if ppl accept ⬇️ wages- laissez fairs best approach- let market solve unemployment
• ⬇️ wages = ⬇️ cost for firms … firms prices can ⬇️ & profit margin maintained
• Real wage unemployment- wage kept artificially above market-clearing wage- … workers ✖️ accept lower wage & … ✖️ work due to ⬇️ wage BUT ✖️ realise that firm prices will ALSO ⬇️
• Believe out of work benefits ⬇️, trade unions ⬇️ & NO minimum wage-> unemployed forced to work

Question 24

What is the Keynesian view on the cause of unemployment?

Answer 24

Keynesian View:

• Demand-deficient unemployment (cyclical unemployment)- caused by lack of AD e.g. recession
• ALSO ⬇️ spending & ⬆️ saving-> ⬇️ job opportunities as ⬇️ AD … firms employ ⬇️
• AND ⬇️ jobs = ⬇️ spending … VICIOUS CIRCLE ⭕️ continues
• Keynesian believe ⬇️ wages ✖️ = ⬆️ employment (classical view) as ⬇️ wages -> ⬇️ spending … ⬇️ ppl needed in employment by firms

Question 25

What are the causes of demand deficient unemployment?

Answer 25

1) ⬆️ saving- SEE ABOVE 2) Lack of business confidence 3) ⬆️ value of currency- imports ⬇️ expensive … ⬆️ & exports ⬆️ expensive … ⬇️-> AD ⬇️ 4) Slow productivity growth compared to their countries 5) External shocks e.g. ⬆️ oil⛽️ price-> ⬇️ spending as demand price inelastic (necessity) for⛽️

Question 26

What are other causes/types of unemployment?

Answer 26

1) Structural unemployment 2) Frictional unemployment 3) Seasonal unemployment

Question 27

What is structural unemployment?

Answer 27

Structural unemployment- workers ⬇️ jobs in declining industry as ✖️ have skills to join other industries

Question 28

What is frictional unemployment?

Answer 28

Frictional unemployment- workers between jobs- moving jobs

Question 29

What is seasonal unemployment?

Answer 29

Seasonal unemployment- workers who only have jobs- certain times of the year e.g. 🏄‍♂‍ 🌊 & 🎿 ❄️instructor

Question 30

Define immigration

Answer 30

Immigration- ppl moving into country

Question 31

Define emigration

Answer 31

Emigration- ppl moving out of country

Question 32

Define net migration

Answer 32

Net migration- immigration ➖ emigration

Question 33

What can immigration lead to?

Answer 33

1) ⬆️ employment if job vacancies filled 2) ⬆️ unemployment or ✖️ change if other ppl displaced from work or work ✖️ found 3) ⬆️ skilled workers are ⬆️ flexible if change in labour market requirements- ✖️ stay unemployed for long & move between jobs despite shocks- demand for these workers only fulfilled by them (rare skills)

Question 34

What are the costs of unemployment on consumers?

Answer 34

⬇️ incomes & living standards ⬇️ | ⬇️ morale when out of work- repercussions for family members

Question 35

What are the costs of unemployment on producers/firms?

Answer 35

⬇️ spending means firms ⬇️ lower prices & … make ⬇️ profit BUT may mean ppl ⬆️ willing to stay in jobs as fear of unemployment- may work harder

Question 36

What are the costs of unemployment on workers?

Answer 36

Workers skills might become out of date due to changes in work after unemployment

Question 37

What are the costs of unemployment on government?

Answer 37

⬆️ unemployment means government pays ⬆️ jobseeker benefits & receive ⬇️ tax

Question 38

What are the costs of unemployment on society?

Answer 38

Unemployed resources = opportunity cost- economy could produce ⬆️ without anything given up-> better standards of living Potential ⬆️ crime 🔪