Macro 2.5.Govt Objectives pt 2 Flashcards
(21 cards)
What is unemployment?
When someone is able to work, is actively seeking work, but is not working.
They must be within the working age 16-64
Workforce?
The number of economically active people
Economically active?
Those of working age who are:
Able to work, AND are (actively seeking work OR actively working)
Economically inactive?
Those of working age who are:
Unable to work or aren’t actively seeking it
Dependants?
Those outside of the working age range (under 16 or over 64)
International Labour Organization’s labour force survey?
A measure of unemployment that records economically active household members who have been out of work for a month and are ready to start within 2 weeks, marking them as unemployed.
It surveys 80,000 households every quarter
Cons of Labour force survey?
Doesn’t survey everyone, causing inaccuracy
Claimant Count?
A measure of unemployment which measures how many people are claiming unemployment benefits
Cons of claimant count?
Not all unemployed people claim benefits due to embarrassment, or if their partner earns to much
Classical unemployment?
Real-wage unemployment is when the wage is above the equilibrium wage. This creates an excess supply of labour also known as unemployment.
Causes:
Govt setting national minimum wage above equilibrium
The power of trade unions pushing wages
Cyclical Unemployment?
Demand deficient unemployment:
Lack of demand in the economy, causes firms to produce less- reducing derived demand for labor as fewer workers are needed.
Structural unemployment?
It occurs when the paradigm of work in the economy changes and jobs shift from one sector to another.
Caused by factor immobility
Frictional unemployment?
When people are temporarily unemployed while searching for a new job.
Seasonal unemployment?
When people are unemployed at certain times of the year, due to seasonal changes.
Name all types of unemployment?
Classical / Real-wage
Cyclical / demand-deficient
Structural
Frictional
Seasonal
Hysterisis?
A recession has long-lasting effects on the economy, which persist after the economy comes out of recession (particularly on unemployment).
Causes of hysterisis?
Wage bargaining by trade unions
Capacity scrapping
Capacity scrapping?
When firms close some factories or offices during a recession, reducing their max capacity
They are unable to respond to increases in demand post-recession
Hysteresis unemployment?
Long-term unemployment that results from persistently high unemployment rates over an extended period of time.
Activity / participation rate?
% of working age population working / actively seeking work
