Unemployment

Question 1

Define Unemployment

Answer 1

Unemployment refers to the state of being without a job, actively seeking employment, willing to work and can work.

Question 2

What is the ONS

Answer 2

ONS - (office of national statistics), publishes reports and figures on UK unemployment.

Question 3

What is the ILO

Answer 3

The ILO unemployment rate is a broader measure that conforms to international standards set by the International Labour Organisation.

It includes people who are out of work, available for work, and actively seeking employment.

Question 4

What is the claimant count

Answer 4

The Claimant Count is a measure of unemployment based on the number of people claiming unemployment-related benefits, such as Jobseeker’s Allowance (JSA) or Universal Credit. (always available b4 ILO)

Question 5

Define Jobseekers Allowance

Answer 5

Job Seekers allowance - a benefit for people who are not in full-time employment (work less than 16 hours per week), are capable of working and are looking for work.

Question 6

Why is the Claimant Count Lower than the ILO

Answer 6

Because not all unemployed are eligible for job seekers allowance or not over 18.

Question 7

What are the measurements of unemployment

Answer 7

Claimant Count

ILO unemployment

Question 8

What are the economic Costs of unemployment

Answer 8

Economic costs – Lost output of goods and services, causes a waste of scarce economic resources and reduces long run growth potential in the economy

Question 9

What are the costs of unemployment

Answer 9

Fiscal costs to the government – Has an impact on government expenditure, taxation and the level of government borrowing each year. Higher unemployment means higher benefit payments and lower tax revenues.

De-skilled Workers – Individuals who are unemployed for a long period of time may loss their skills as a result of rapid changing markets, meaning a lower chance of the unemployed becoming employed again

Question 10

What are the social costs of unemployment

Answer 10

Social Costs of Unemployment - There is some relationship between A rise in unemployment and a rise in crime. Also Unemployment causes Stress which is linked to mental health issues.

Question 11

Define Labour Force

Answer 11

People with a job or registered as actively looking for work

Question 12

What is the labour force participation rate

Answer 12

The labour Force Participation Rate – Equals the percentage of the population of working age who are in the labour force

Question 13

What are the economic consequences of unemployment

Answer 13

Increased spending on unemployment benefits and other income

Fall in revenue from income tax and taxes on consumer spending

Lost Output (GDP), economy operating within the potential production frontier

Increase in inequality of income and wealth, rise in relative poverty.

Question 14

When is the labour market at equalibrium

Answer 14

Firstly, the labour market is in equilibrium where demand for labour is equal to the supply of labour.

Question 15

When does unemployment occur in the labour market (diagram)

Answer 15

Unemployment occurs due to the labour market moving away from the equilibrium or measured unemployment when the labour market is at equilibrium.

When the market moves away from equilibrium there is potential for excess supply of labour.

Question 16

Define involuntary unemployment

Answer 16

Involuntary Unemployment - Individuals who are willing and able to work at the prevailing wage rates are unable to find employment.

Question 17

Define Cyclical Unemployment

Answer 17

a type of unemployment that is caused by fluctuations in the business cycle or economic cycle

Question 18

Define Voluntary unemployment

Answer 18

When people choose not to work even though it is available

Question 19

Define Classical Unemployment

Answer 19

Classical unemployment – occurs when real wages, or the cost of employing a worker, are too high

Question 20

Define Frictional Unemployment

Answer 20

Frictional Unemployment – Workers who are temporarily unemployed such as moving from school to work that time between or want better wages and looks for a better job

Question 21

Define Seasonal Unemployment

Answer 21

Seasonal Unemployment - When a worker is unemployed due to their niche market being not seasonably demanded and chooses not to get another job

Question 22

Define Structural Unemployment

Answer 22

Structural Unemployment - When there is a change in the business and the jobs are not needed such as technological advancements, or a decline in the industry, overall when there is a structural change in the economy (more long-term)

Question 23

Define the Natural Rate of unemployment

Answer 23

The natural rate of unemployment is the rate of unemployment when the labour market is in equilibrium.

Consists of structural, frictional and seasonal unemployment

Question 24

Why do we use demand side policies to help unemployment

Answer 24

Demand side policies- Overall these policies aim to increase aggregate demand to keep jobs in demand and to reduce demand deficient unemployment.

Question 25

List Supply side policies which help against unemployment

Answer 25

Overall these policies reduce structural unemployment (natural rate of unemployment.

Education and training
Geographical subsidies - help workers and firms move
Employment Subsidies - incentive to keep long term employees

Question 26

What do Classical Economists believe will occur when there is a wage change

Answer 26

That there is an instantaneous adjustment to the labour market as people will realise that they need to take lower wage jobs as of the news and historic trends.

Question 27

What do Keynesian Economists believe will occur when there is a wage change

Answer 27

That it will take several months even years for the labour market to clear due to sticky wages.

Question 28

Define the labour force survey

Answer 28

This is a survey asking 60,000 people whether they were unemployed and whether they were looking for a job.