Macro - unemployment Flashcards
(18 cards)
What are the types of unemployment?
Frictional, structural, seasonal, cyclical
What is underemployment?
Those in part time or zero hour contracts when they would prefer to be full time. Inludes those in jobs which do not reflect skill level.
What is frictional unemployment?
When people are moving between jobs. People may take a while to locate and gain a job they are willing to accept. This is not a serious problem as it is only short term.
What is structural unemployment?
- Long-term decline in demand in an industry leading to a reduction in employment. Perhaps because of increased international competition or technology. The lack of geographical and occupational mobility means people will remain unemployed and so will need to be retrained in order to gain a job.
3 types of structural employment?
- Regional unemployment: certain areas of the country suffer from low levels of employment due to industry closure.
- Sectoral unemployment: where one sector suffers a dramatic fall in employment.
- technological unemployment
Seasonal unemployment?
Where the labor force is strongly seasonal in demand, like tourism. There is little that can be done to prevent this from occurring in a free-market economy.
Cyclical unemployment?
Unemployment due to a general lack of demand for goods or services within the country. This is also known as Keynesian ‘demand-deficient unemployment.
When there is a recession or severe slowdown in economic growth, we see rising unemployment due to a decrease in demand causing businesses to cut employment in order to control costs and restore some of their profitability.
How has migration affected employment? positive
An increase in net inward migration tends to lead to increased jobs. Most of these people come to the UK to work, ae of working age and often take lower skilled jobs. Due to the circular flow of inome, immigrants spending creates jobs and total employment increases without an increase in unemployment. This depends how much money immigrant workers spend home.
How has migration affected employment? - negative
It leads to lower wages for lower-paid, low skilled jobs. UK firms ae able to recruit foreign workers meaning that supply of labour is increased and so the price equilibrium of labour is reduced. Thee is more competition for obs and UK workers who have low motivation to work and are low skilled are most affected as they are competing in the job market with hard working, more skilled workers prepared to take the same jobs as them. The impact of this s only small and middle and higher income wages ae rarely affected.
How does skills affect employment?
Economies progress over time, and as a result, higher skills are needs to work in them. If firms will not train staff, the government has to step in to correct the market failure which is costly.
Impacts of employment on workers?
- loss of income > decline in living standards
- stigma of being unemployed and feel degraded by the process of signing on to receive benefits > stress, familial breakdown mental health issues
- Long-term unemployed find it more difficult to get another job as they lose skills.
Impacts of unemployment on firms?
- decrease n demand for their goods so could lead to fall in profit ( depends on YED)
-long term unemployment leads to a oss of skills so firms have smaller pool of skilled people to employ. - Low wages can be offered i people have few options.
Impacts of unemployment on consumers?
- Local businesses tend to be run down in areas of low unemployment, so consumers have less choice, and the quality of goods may decrease.
- unemployed consumers have less available to spend
Firms may lower prices and put on sales to increase demand for their product.
Impacts of unemployment on government?
- fall in tax revenues & higher spending on welfare payments
- results in an increase in budget deficit so govt. will likely raise taxation or scale back public spending. may inreae borrowing
Impacts of unemployment on society as a whole
- rising unemployment is linked to social deprivation - crime and social dislocation.
- loss
What is claimant count?
Number of people receiving obseekers allowance/ unemployed benefits.
What is the ILO definition of unemployed?
Those of working age who are without work, able to work and seeking work and have actively sought work in the last 4 weeks and are available to start work in 2 weeks.
What will an increase in inactivity do?
Decrease the size of the labour force, causing a fall in the productive potential of the country. There will be a lower GDP and lower tax revenues as less people are working.
